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Oil and gas futures up on violence in Nigeria
The Associated Press
Oil and gasoline futures rose July 5 on renewed violence in Nigeria, despite expectations that a U.S. government inventory report will show gasoline supplies rose the last week in June.
The market was on edge after gunmen on July 4 attacked a Royal Dutch Shell PLC oil rig in Nigeria’s southern oil heartland and seized five foreign workers. Shell said no production was lost. The attack came as a Nigerian opposition group threatened to end a one-month truce in its attacks against the government and the nation’s oil industry.
“The honeymoon in Nigeria may be coming to a close, as members of MEND, the Movement for the Emancipation of the Niger Delta, threatened yesterday to resume attacks on oil installations in their primary area of operation,” wrote Peter Beutel, president of U.S. energy risk management firm Cameron Hanover, in a research note.
Nigeria is Africa’s biggest oil producer and one of the top overseas suppliers to the United States.
Light, sweet crude for August delivery rose 68 cents to $72.09 a barrel on the New York Mercantile Exchange, trading at yet another 10-month high, while August gasoline futures rose 1.12 cents to $2.2756 a gallon. August Brent crude rose $1.13 to $74.18 a barrel on the ICE Futures exchange in London.
Nymex heating oil futures rose 2.13 cents to $2.0875 a gallon, while natural gas prices fell 5.6 cents to $6.698 per 1,000 cubic feet.
Analysts say energy prices are also getting a boost from fears that terrorists may try to mark the second anniversary of the London bomb attacks on July 7 with additional strikes.
Analysts expect increased inventories The July 5 price increases come as traders await a report from the Energy Department’s Energy Information Administration — delayed by one day due to the July 4th holiday — that is expected to show increases in gasoline inventories and refinery utilization.
Analysts surveyed by Dow Jones Newswires, on average, expect the report to show that gasoline inventories increased by 700,000 barrels in the week ended June 29. Refinery utilization is expected to have risen 1.1 percentage points to 90.5 percent.
The increase in refinery runs is expected to have tapped into crude inventories, which are at nine-year highs. Analysts, on average, expect the report to show crude inventories fell by 500,000 barrels last week. Distillate inventories, which include heating oil and diesel fuel, are expected to have declined by 200,000 barrels.
Gas and oil prices have rallied in recent months on concerns the U.S. refining industry is not keeping pace with consumer demand for gas. The spring saw an unusual number of refinery outages, stoking those concerns.
While oil inventories have risen behind a bottleneck of temporarily shuttered refineries, gasoline supplies have fallen. Prices of both have jumped, as oil has traded higher in sympathy with gasoline futures, analysts say.
Despite high gas prices, demand continues to grow.
And reports of refinery outages continue. Floodwaters continue to keep a refinery in Coffeyville, Kansas, out of commission, and problems have been reported with equipment at a ConocoPhillips’ refinery in Borger, Texas, a Flint Hills Resources LP facility in Corpus Christi, Texas, and an Exxon Mobil Corp. refinery in Beaumont, Texas.
However, analysts note that a number of other refineries have recently returned to service.
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