SINGAPORE, (AP) – Oil prices rose Friday on worries of tightening U.S. gasoline supplies amid refinery problems in the United States and declining stocks of the fuel.
“Concerns about U.S. gasoline supply are underpinning the crude oil futures market,” said Victor Shum, energy analyst with Purvin & Gertz in Singapore.
Light, sweet crude for June delivery rose 22 cents to $65.28 a barrel in Asian electronic trading on the New York Mercantile Exchange mid-afternoon in Singapore. The contract fell 78 cents to settle at $65.06 a barrel Thursday. Heating oil futures added 0.54 cent to $1.8945 a gallon while gasoline prices gained a tad to $2.2976 a gallon. Natural gas prices dropped 1.2 cents to $7.59 per 1,000 cubic feet.
Brent crude for June rose 20 cents to $67.85 a barrel on the ICE Futures exchange in London.
With the start of the summer driving season about a month away, traders are beginning to wonder whether gasoline supplies will be adequate to meet demand.
A fire at Marathon Oil Corp.’s Garyville, Louisiana, refinery caused a run-up in prices earlier in the session on Thursday. Prices fell after the company said the fire was small and immediately extinguished.
“It seems U.S. refineries have had a lot of bad luck recently. And U.S. gasoline inventories are at a historic low. It’s going to be a tight situation,” Shum said.
Wednesday’s U.S. Energy Department report showed a large, unexpected drop in U.S. gasoline stockpiles of 2.8 million barrels last week — when analysts had expected a gain of 200,000 barrels. The report also said U.S. refinery use in the same period declined 2.6 percentage points to 87.8 percent of capacity.
Gasoline supply fears overshadowed the unexpected 2.1 million-barrel increase in crude oil inventories, which analysts had expected to decline.
Meanwhile, a possible improvement in the tense situation surrounding Iran’s nuclear capability also gives the market a reason to depress prices, analysts said. Iran’s top nuclear negotiator said talks with a senior European Union official had brought them closer to a united view of how to break a deadlock over a U.N. Security Council demand that Tehran freeze its uranium enrichment program.
The upbeat comments by Ali Larijani boosted hopes that he and Javier Solana, the European Union’s top foreign policy official, had chipped away at differences over enrichment — a potential pathway to nuclear arms — in two days of talks.
Iran’s defiance of the U.N. Security Council demands on enrichment has led to two sets of sanctions against the country.