Light sweet crude settled at $48.97 up 36 cents for the day on Tuesday after dropping to $47.60 on Monday. Prices steadied today after promises to cover demand from OPEC and Saudi Arabia and expectations of U.S. inventory growth in the U.S. Dept. of Energy Report on Wednesday.
Gasoline futures traded up today, closing up 3 cents at $1.43 a gallon and Brent North Sea crude was up 25 cents to $49.34 a barrel on the International Exchange in London.
OPEC maintains they can handle the worldwide demand and keep production at 25-year highs as long as is needed. They currently pump about 30 million bpd and say they have some room to grow for additional production. OPEC also revised down the oil demand growth estimate by about 80,000 barrels. They also went on to say that they expect another 10% added to the capacity as new oil field come online.
“Slower demand growth for the United States and China, coupled with the large increases in OPEC output since mid-2004 and the substantial efforts by member countries to increase production capacity should remove a large part of the speculative premium in the oil price,” an OPEC report said.
U.S. refineries demonstrated consistent maintenance problems throughout the spring. The Conoco/Phillips facility in Louisiana continues with one problem after another and remains down this week after power outage problems from last week. They were already down once this year for two weeks for unscheduled maintenance issues and other facilities have had problems. Sunoco had reformer problems at their facility a couple of weeks ago.
Despite these problems, the refineries overall have been running at over 90% of total capacity. As gasoline consumption continues to grow world wide in China, India and the U.S. Right now, the real problem remains at those refineries, particularly in the U.S. and no one seems ready to start building the new facilities and even if they do, it won’t help the problems in the short term.
John Stith is a staff writer for Murdok covering technology and business.
