Tags: Oil | Prices | Climb | Blast | Impact | Downplayed

Oil Prices Climb, Blast Impact Downplayed

Thursday, 24 March 2005 12:00 AM

Crude futures are down more than $2 a barrel from the intraday peak set last Thursday due to the strengthening dollar and rising U.S. inventories of crude. But analysts said that correction may prove temporary.

Light, sweet crude for May delivery rose $1.02 to $54.83 a barrel in afternoon trading on the New York Mercantile Exchange. Analysts said that with the market closed Friday in observance of Good Friday, traders were mainly buying so as not to get caught off-guard in the event of a supply disruption over the long weekend.

Gasoline futures climbed 2.5 cents to $1.60 per gallon on Nymex.

Oil analyst John Kilduff at New York-based brokerage Fimat USA said "except for the human tragedy" the Wednesday explosion at a BP refinery in Texas was "really a non-event for the market."

"It shouldn't impact supplies of gasoline in the United States at all," Kilduff said.

The BP refinery in Texas City, Texas, produces 30 percent of the company's North American supply of petroleum products, and 3 percent of the U.S. petroleum products supply. It processes about 430,000 barrels of crude oil a day.

The cause of the explosion, which left 15 people dead and more than 100 injured, was not immediately known. It occurred in a section of the plant that produces additives to boost the octane level of gasoline. The unit was being restarted after routine maintenance when the incident occurred, said Hugh Depland, a BP spokesman.

Deutsche Bank analyst Adam Sieminski in London said that despite the inventory builds shown in the U.S. Energy Department weekly report Wednesday, strong demand from China and other growing economies would probably keep prices high for months to come.

While new figures show lesser Chinese hunger for energy, "demand is still rising and that's what's got people worried," he said.

Oil futures on the Nymex are down more than $2 a barrel since their intraday high of $57.60 set last Thursday.

Flynn described the recent drop from all-time highs as a "correction of a market that was ahead of itself."

"The bulls are still waiting," he said.

Oil is roughly 45 percent more expensive than a year ago but still well below the inflation-adjusted peak above $90 a barrel set in 1980.

Bringing at least temporary relief, the U.S. report said that crude oil inventories rose by 4.1 million barrels last week to 309.3 million barrels, or 8 percent above year-ago levels.

The strengthening dollar has also eased the crude market in recent days, as a rise in the dollar - the currency of international oil trading - will spur funds to switch money from commodities such as energy and metals into foreign exchange markets.

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Crude futures are down more than $2 a barrel from the intraday peak set last Thursday due to the strengthening dollar and rising U.S. inventories of crude. But analysts said that correction may prove temporary. Light, sweet crude for May delivery rose $1.02 to $54.83 a...
Oil,Prices,Climb,,Blast,Impact,Downplayed
447
2005-00-24
Thursday, 24 March 2005 12:00 AM
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