Oil prices rose Friday on persistent concerns that U.S. refiners are not producing enough gasoline to meet peak summer demand following reports of more refinery snags.
Light, sweet crude for June delivery added 18 cents to US$65.04 a barrel in Asian electronic trading on the New York Mercantile Exchange midmorning in Singapore. The contract on Thursday climbed US$2.31 to settle at US$64.86 a barrel, the highest close this month.
With the Northern Hemisphere's summer driving season set to begin in just over a week, energy traders have been concerned that gasoline supplies are not catching up to demand, and a string of planned or unexpected refinery shutdowns have fueled such worries.
"It seems that every day there are announcements of refinery glitches in the U.S., and this rash of refinery snags is driving the crude futures market," said Victor Shum, energy analyst with Purvin & Gertz in Singapore.
Murphy Oil Corp. said its 125,000-barrel-a-day Meraux, Louisiana, refinery has shut down a crude unit for minor repairs, Dow Jones Newswires reported. Shutdowns at a number of U.S. refineries were also reported by BP PLC, ConocoPhillips and Valero Energy Corp., analysts said.
"The market's immediate concern is the tight gasoline supply situation in the U.S.," Shum said.
The U.S. Energy Information Administration reported Wednesday that gasoline stocks, while increasing to 195.2 million barrels last week, remained well below the average for this time of year.
The EIA says in a report on its Web site that over the 12 consecutive weeks from February to April, gasoline stockpiles in the U.S. declined by a cumulative total of more than 34 million barrels, or 15 percent. That makes it the sharpest decline in gasoline inventories over a consecutive 12-week period, according to the agency's recorded historical data.
Shum said crude futures were also supported by news of a planned nationwide strike in Nigeria, Africa's largest oil exporter, at the end of the month.
Labor leaders in Nigeria on Thursday called a two-day strike on May 28 in protest of last month's elections. The strike is scheduled to coincide with the inauguration of a new government. The unions argue that the April elections which gave a sweeping victory to President-elect Umaru Yar'Adua and the ruling People's Democratic Party were fraudulent and unacceptable. They have called for a re-run of the vote.
"In Nigeria, the news of a general strike towards the end of the month means here we go again, more supply disruptions out of Nigeria," Shum said.
A series of recent bombings, kidnappings and protests have slashed production by nearly 1 million barrels per day in Nigeria, representing around one-third of its total capacity.
Also giving prices a boost, OPEC Secretary General Abdalla Salem El-Badri on Thursday in Bali, Indonesia, said global oil markets are amply supplied and do not need an increase in crude oil production before the summer.
Heating oil futures dropped 0.72 cent to US$1.9295 a gallon (3.8 liters) while natural gas prices rose 2.9 cents to US$8.104 per 1,000 cubic feet.