SINGAPORE, AP – Crude oil prices dropped below $63 a barrel Wednesday, and gasoline futures slipped nearly 2 cents after surging nearly 7 percent the previous day on news of production snags at a huge Caribbean refinery.
Light, sweet crude for April delivery dropped 31 cents to $62.79 a barrel in electronic trading on the New York Mercantile Exchange. Gasoline futures dropped 1.95 cents to $1.8465 a gallon after the spike on Tuesday.
Heating oil futures slid 1.42 cents to $1.8070 a gallon, while natural gas futures dropped 4.7 cents to $7.120 per 1,000 cubic feet.
On Tuesday, gasoline futures rose 12.27 cents to settle at $1.866 a gallon on the New York Mercantile Exchange. Brokers said the rally was sparked after Amerada Hess Corp. said that over the weekend it unexpectedly shut a gasoline producing unit at a refinery in St. Croix that it co-owns with Petroleos de Venezuela SA. The spokesman said repairs to the unit, which refines roughly 150,000 barrels of crude per day, could take up to two weeks.
Also, the so-called turnaround season is approaching. During this period, refiners shut down their plants to perform maintenance ahead of summer, which is traditionally the busiest period for gasoline production. It often causes supplies to tighten and prices to rise.
A month ago, gasoline futures settled at $1.38.
Also putting some upward pressure on prices on Tuesday were analysts’ expectations that U.S. government data scheduled to be released Wednesday will show a decline in gasoline inventories from a week ago.
Light sweet crude for April delivery gained $1.33 to close at $63.10 a barrel on Tuesday.
Meanwhile, the International Energy Agency, a watchdog for the world’s energy consumers, on Tuesday lowered its 2006 oil demand estimate by 290,000 barrels per day because of persistently high fuel prices and slowing consumption in Southeast Asia.
Unrest in Nigeria and the possibility of U.N. sanctions against Iran, the No. 2 producer within OPEC, for its nuclear ambitions continue to support prices.