BUDAPEST, Hungary, AP -Crude-oil prices eased slightly after soaring to new highs past $66 a barrel on Friday, as reports of new U.S. refinery outages rekindled fears that gasoline supplies in the world”s biggest consuming nation would struggle to meet rising demand.
A spate of refinery glitches, an unusually active hurricane season in the U.S. and concerns over Iran”s decision to resume uranium conversion activities weighed heavily on trader”s minds, analysts said.
With bullish sentiment unabated and crude prices hitting five consecutive highs in just as many days this week, analysts expect front-month crude contracts to test the $70-a-barrel threshold.
Light, sweet crude for September delivery edged down 11 cents to $65.69 in electronic trading on the New York Mercantile Exchange by late morning in Europe, after hitting a new record high of $66.13 a barrel earlier.
Gasoline was trading little changed at $1.9500 a gallon while heating oil was down over a cent to $1.8871.
In London, Brent crude for September delivery was trading at $65.29 a barrel, down 9 cents.
Analysts said gasoline demand, currently at its peak in the U.S. summer driving season, was driving crude”s gains. Last week, U.S. gasoline demand picked up by 1.4 percent from a year ago, according to government data.
Coupled with new reports of refinery outages this week, traders fear U.S. refiners, already running at near-maximized capacities, are straining to satisfy the rising demand.
"People fear there won”t be enough gasoline at a time when it”s so greatly demanded, so they”re just buying, buying and buying," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Oil prices are almost 50 percent higher than a year ago, but they would need to surpass $90 a barrel to exceed the inflation-adjusted peak set in 1980.
The U.S. Energy Department said Wednesday that gasoline inventories fell 2.1 million barrels to 203.1 million last week.
"The refinery breakdowns are a big issue, they”re happening at a time when gasoline supplies are already very tight," Emori said.
Among the latest refinery outages: several units at ConocoPhillips” 306,000 barrel-a-day Wood River, Ill., refinery were shut after a thunderstorm caused a power failure at the plant.
Also, BP PLC shut down a hydrogen recovery unit Aug. 10 at its massive 470,000 barrel-a-day Texas City refinery, following a decision by the company to keep high-pressure units off line until they can be proven safe, BP spokesman Scott Dean said Thursday.
The three other high-pressure units at the refinery — the residual hydrotreater, the ultracracker and the gas oil hydrotreater — were already off line Wednesday and will be kept down pending investigations, Dean said.
The incidents are the latest in a string of outages to hit about a dozen U.S. refineries that together can process 2.7 million barrels a day of crude oil, some 16 percent of total U.S. refining capacity.
Analysts said traders were focusing selectively on information that would send prices higher.
Traders appeared to discount a downward revision in oil demand forecast by the International Energy Agency released Thursday. The group”s monthly report projected that demand would be 150,000 barrels a day less then it expected, as demand from China appears to show signs of weakening.
Instead, the focus seemed to be on sections of the report that reduced its estimate of output by Russia and other nonmembers of the Organization of Petroleum Exporting Countries, analysts said.