Refinery fires risk gasoline supplies

BY MARK SHENK <a href=www.nwanews.com>BLOOMBERG NEWS Posted on Wednesday, June 11, 2003

Crude oil rose to a 12-week high Tuesday as fires closed units at Louisiana refineries operated by Exxon Mobil Corp. and Murphy Oil Corp., raising concerns of possible limited gasoline supplies during the fuel’s busiest season.

U.S. gasoline inventories, for the week that ended May 30, were down 4 percent from a year earlier, Energy Department figures show. Refiners that week operated at 98 percent of capacity, a two-year high. "When refineries are running at such a high rate there are going to be problems," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York, a gasoline and heating oil marketer. "You can expect to see units blow up."

Crude oil for July delivery rose 28 cents, or 0.9 percent, to $31.73 a barrel on the New York Mercantile Exchange, the highest closing price since March 17.

Oil had fallen as low as $30.90 a barrel before the rally, after OPEC officials, gathering in Doha, Qatar, for a meeting today, said they saw no need to cut oil output quotas.

Meantime, gasoline for July delivery rose 2.06 cents, or 2.3 percent, to 91.71 cents a gallon in New York, the highest close since March 31. U.S. gasoline demand peaks during the vacation season, which runs from Memorial Day in May to Labor Day in early September. "Gasoline has been a steadying influence on the crude-oil market," said Tom Bentz, an oil broker at BNP Paribas Commodity Futures Inc. in New York. "When crude oil was falling flat on its face earlier today, gasoline limited the decline."

Exxon Mobil said a fire broke out Tuesday at a coker unit in its Chalmette, La., refinery. All other units at the refinery were operating normally, spokesman Kimberly Brasington said. The refinery, a joint venture with Venezuela’s state oil company Petroleos de Venezuela SA, can process 180,000 barrels of crude oil a day.

Murphy Oil, which is based in El Dorado, Ark., shut its refinery in Meraux, La., after a fire broke out in the residual-oil supercritical extraction and vacuum units about 2 a.m. Tuesday, according to a company statement. The fire in the vacuum unit was extinguished by 5:15 a.m., and Murphy said Tuesday afternoon that the fire in the extraction unit also was out.

Two employees suffered minor injuries at the refinery, which can process about 100,000 barrels of crude a day.

The Organization of Petroleum Exporting Countries is unlikely to change oil-output quotas as long as oil prices stay within a range of $22 to $28 a barrel, OPEC Secretary-General Alvaro Silva Calderon said Tuesday in Qatar. OPEC’s basket of seven crude oils averaged $27.53 a barrel Monday.

OPEC, which produces a third of the world’s oil, had considered cutting output to make room for renewed exports from Iraq, where the U.S.-led invasion in March halted shipments.