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CRUDE
oil traded near a record $120.36 a barrel in New York on
speculation demand will rise during the peak summer
driving season in the US and ahead of the Beijing
Olympic Games.
A report
Tuesday showed
US
service industries expanded in April, signaling higher
energy use. The Institute for Supply Management said its
index of nonmanufacturing businesses, which make up
almost 90 percent of the economy, grew for the first
time since December. China is increasing refining
capacity and boosting oil imports to meet rising demand
for the August Games.
“The US
is entering the summer driving season in three to four
weeks. There’s the Beijing Olympics and new refineries
coming online in
China,
they are going to need to fill their stocks,” said
Jonathan Kornafel, the director for Asia at Hudson
Capital Energy in Singapore. “There are bad news coming
out every day on the supply side, it’s a scary picture
right now.”
Crude
oil for June delivery was at $120.08 a barrel, up 11
cents, at 12:19 p.m. in Singapore in after-hours trading
on the New York Mercantile Exchange. On Monday futures
reached an intraday record before closing 3.1 percent up
at $119.97 a barrel, the highest closing price since
trading began in 1983.
US
refining capacity utilization rose above 85 percent in
the week ended April 18 for the first time since
February as refiners increased output for the
peak-demand summer months.
The US
is the world’s largest energy user and
China
is second.
Nigeria attack
A
weekend attack in
Nigeria,
Africa’s biggest oil producer, forced Royal Dutch Shell
Plc. to reduce output, the Associated Press reported on
May 3, citing the company. The Movement for the
Emancipation of the Niger Delta, or MEND, claimed
responsibility for the assault.
MEND has
targeted Shell-operated pipelines in Nigeria, forcing
the company to halt 170,000 barrels a day of exports of
Bonny Light crude.
Exxon
Mobil Corp.’s
Nigeria
unit will probably return to its normal rate of oil
production of about 860,000 barrels a day by the middle
of the week following the settlement of a labor strike,
a government spokesman said.
Brent
crude oil for June settlement was trading at $118.13 a
barrel, up 14 cents, at 12:20 p.m. Singapore time.
Monday, the contract rose $3.43, or 3 percent, to a
record close of $117.99 a barrel on London’s ICE Futures
Europe exchange.
Prices
touched an intraday high of $118.58 a barrel.
Summer
demand
Gasoline
demand typically climbs going into the summer months
when Americans take to the highways for vacations. The
peak-consumption period lasts from the Memorial Day
weekend in late May to Labor Day in early September.
Monthly fuel sales were the highest during August in
five of the last six years, according to data from the
Department of Energy.
The US
lost fewer jobs than forecast last month and the
unemployment rate fell to 5 percent in April from 5.1
percent in March, according to data from the Labor
Department on May 2. Payrolls shrank by 20,000 workers,
following an 81,000 drop in March.
“Oil
prices started to rally last week in response to the US
jobs report and yesterday there is data to show a growth
in services,’” said Victor Shum, senior principal at
consultant Purvin & Gertz Inc. in Singapore. “These are
good signs for the
US
economy as the slowdown is not going to be as deep as we
thought and that means stronger oil demand.’”
PetroChina Co. and China Petroleum and Chemical Corp.,
which account for 90 percent of the nation’s oil
refining capacity, are expanding their plants and
boosting imports to meet growing energy needs.
China
Petroleum is starting commercial output this month at
its 10 million metric-ton-a-year facility in Qingdao
before the Olympic Games in the Chinese capital, parent
China Petrochemical Corp. said last week.
“China
accounted for a third of last year’s growth in global
oil demand and will continue to counterbalance any drop
in US consumption,” Shum said “The Chinese refiners are
stock building ahead of the Games to prevent fuel
shortages and that will boost demand in the months
before.” |
