Oil Prices Hit New High,
Topping $46 a Barrel
By MASOOOD FARIVAR
DOW JONES NEWSWIRES
August 13, 2004 5:01 p.m.
NEW YORK -- Crude-oil futures topped $46 a barrel for the first time Friday as a fire at a large BP refinery added to supply fears and robust demand combined to keep energy markets in a feverish state.
At the New York Mercantile Exchange, crude set for September delivery jumped $1.15 to a new all-time high of $46.65 a barrel. The contract eventually gained $1.08 to $46.58, a new settlement high.
At London's International Petroleum Exchange, September Brent crude soared $1.63 to a new high of $43.92 a barrel.
Nymex September gasoline jumped 4.87 cents to end the session at $1.3468 a gallon. Gasoline futures have risen more than 11 cents in the past three days amid renewed supply concerns after falling sharply in July. September heating oil was up 2.35 cents to $1.2145 a gallon. September natural gas rose 9.1 cents to $5.533 per million British thermal units.
The latest supply worry came after an explosion early Friday at BP PLC's giant Whiting, Ind., refinery. The blast knocked out one of four gasoline-making units at the plant, forcing the company to buy gasoline on the open market to meet its customer obligations, traders said.
Built in 1889, the refinery is the third-largest in the U.S. and has a total crude throughput capacity of 410,000 barrels a day. News of trouble at the refinery sent Chicago area gasoline prices soaring.
The outage of a refinery unit usually leads to less demand. But in this case, the Whiting incident was seen as the latest in a string of real or feared supply disruptions around the world.
"Even without the BP fire, this market was poised to move higher because of concerns about international supplies," said Phil Flynn, an analyst at brokerage Alaron Trading Corp. in Chicago.
Paramount among those concerns is the potential loss of Iraqi oil supplies. Iraq exports 1.7 million barrels of oil a day, about 2% of global consumption. Shiite militiamen battling U.S. forces in southern Iraq have threatened to blow up key oil pipelines in the region if the U.S. proceeds with an attack on Najaf.
The U.S. military suspended a planned major offensive on the city as Iraqi government officials sought to negotiate an end to the fighting. But traders were unwilling to leave for the weekend with uncovered positions, Mr. Flynn said.
"It's a wall of worry," he said. "Traders are just too worried about all the factors that could go wrong to hold short positions ahead of the weekend."
Also supporting oil prices is concern that a presidential recall referendum scheduled for Sunday in oil rich Venezuela could destabilize that country, analysts said.
But while Venezuela, Iraq and the Whiting explosion were cited as sources of supply concern, analysts attributed the latest record in oil prices to more general fears of a supply disruption.
"The story is the same," said Kyle Cooper, an analyst with Citigroup Inc. in Houston. "The market again continued to roar higher as fear of supply disruptions remains the major market factor.
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