Oil fluctuated near a one-week low in New York as gasoline futures surged on speculation that refinery shutdowns may limit stockpiles of the motor fuel and China raised interest rates.
Crude fell as much as 1.8 percent before paring declines as gasoline rose amid disruptions at Valero Energy Corp.’s refineries in Port Arthur, Texas, and Aruba and Exxon Mobil Corp.’s plant in Baton Rouge, Louisiana. China increased rates for the third time since mid-October, sparking concern that fuel demand will drop.
“Gasoline seems to be the strong hand right now,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Supplies are pretty ample, but around the globe the refinery issues continue to multiply. The market is also looking at the China interest rate increase and wondering whether that’s going to be enough to substantially slow demand.”
Oil for March delivery fell 29 cents, or 0.3 percent, to $87.19 a barrel at 11:06 a.m. on the New York Mercantile Exchange. Futures have risen 21 percent in the past year.
Brent crude for March settlement gained 59 cents, or 0.6 percent, to $99.84 a barrel on the ICE Futures Europe exchange in London.
Valero halted production from a fluid catalytic cracker at its 310,000-barrel-a-day Port Arthur refinery yesterday after a loss of steam. The company’s Aruba refinery shut after a water tank collapsed Feb. 4, and Exxon Mobil has started work at is 503,000-barrel-a-day Baton Rouge plant after an equipment failure caused by a leak in a line at the facility.
Lending Rate
New York futures tumbled to $85.88 a barrel in intraday trading, the lowest price since Jan. 28, as the People’s Bank of China boosted the one-year lending rate to 6.06 percent from 5.81 percent to curb inflation. China is the world’s biggest energy-consuming country and the second-largest oil user after the U.S.
“It’s all about China right now,” said Tom Bentz, a broker with BNP Paribas Commodity Futures in New York. “Climbing Chinese interest rates could slow the economy.”
China raised its rates as growth accelerated and inflation stayed above 4 percent. Consumer prices climbed 4.6 percent in December and the economy expanded 9.8 percent in the fourth quarter, faster than the pace in the previous three months.
The International Energy Agency, the Paris-based adviser to 28 nations, forecast last month that Chinese fuel demand would grow 4.8 percent in 2011 to 9.79 million barrels a day. That compares with a 12 percent jump to 9.34 million barrels a day in 2010.
Robust Demand
“I wouldn’t expect prices to fall lastingly after the Chinese rate decision,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “Demand in China will likely remain robust. At some point higher interest rates will bite into demand, but not yet.”
Crude also declined before a report tomorrow that may show U.S. crude inventories increased for a fourth week and as political tension in Egypt eased.
U.S. crude supplies gained 2 million barrels from 343.2 million in the seven days ended Feb. 4, according to a Bloomberg News survey of 14 analysts before an Energy Department report tomorrow.
Gasoline inventories probably climbed to the highest level in almost 18 years, the survey showed. Supplies of the motor fuel increased 2.7 million barrels, or 1.1 percent, from 236.2 million a week earlier, according to the median of 15 analyst estimates. The projected advance would leave stockpiles at the highest level since Feb. 26, 1993.
Gasoline Rises
Gasoline for March delivery gained 4.51 cents, or 1.8 percent, to $2.4956 a gallon on the Nymex. Earlier, it touched $2.5067. Prices have jumped 32 percent in the past year.
The gasoline crack spread, the hypothetical profit margin for refining a barrel of oil into a barrel of gasoline, based on Nymex futures prices, jumped $2.04, or 13 percent, to $17.481 a barrel, the highest level since May 14. It has climbed 32 percent in the past two days.
Egyptian Vice President Omar Suleiman said a committee would begin work today on redrafting the constitution following two days of negotiations with opposition leaders in which he promised wider press freedom and said he would work to produce a checklist of measure needed to hold free elections.
“The unrest in Egypt is subsiding, but isn’t over by a long shot, said Paul Crovo, a Philadelphia-based oil analyst at PNC Capital Advisors. “We’ll continue looking at Egypt to gain clarity about the situation.”
Investors should consider selling crude because the calming of Egypt’s crisis may trigger a “notable correction,” according to JPMorgan Chase & Co.
“This week will be characterized by a drift down in crude prices on days where either no new tensions arise or where political progress is perceived,” JPMorgan analysts led by New York-based Lawrence Eagles said in a report dated yesterday. “Investors should therefore consider taking profits on all or a portion of their remaining long positions.”
Fuente: bloomberg.com