honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Thursday, January 16, 2003

U.S. oil supplies near critical low

By Joe Carroll
Bloomberg News

A 45-day work stoppage in Venezuela has created long lines at gas stations there and a drop in oil delivery to the U.S. That has help push U.S. oil supplies to a 27-year low.

Associated Press

CHICAGO — U.S. residual fuel prices, which have more than doubled in the past year, rose for a fourth day as a Venezuelan strike in its seventh week reduces supplies of the oil product.

The strike slashed output by the world's fifth-largest oil producer, forcing some refiners to curtail production or pay more for replacement supplies, traders said. U.S. stockpiles of residual fuel, used to power electricity plants and cargo ships, fell to a 5 1/2-year low two weeks ago.

Prices "are following crude higher because of the Venezuelan situation," said James Kelleher, president of Harbor Petroleum Inc., a Manasquan, New Jersey, fuel broker.

Residual oil with 3 percent sulfur rose 62 cents, or 2.1 percent, to $30.25 a barrel at U.S. Gulf Coast terminals, the highest since at least January 1982, according to Bloomberg data. The price is for fuel delivered free on board, or without charge for delivery into a tanker or barge.

Gulf Coast prices are up 56 percent since the strike began on Dec. 2.

Refiners along the Gulf of Mexico have been exporting supplies usually sold in domestic markets to the Caribbean, where prices are higher because of the dearth of Venezuelan supplies, traders said.

Prices have also benefited from colder-than-normal weather in the Northeast that boosted demand for power, traders said. Residual fuel includes No. 6 oil burned in electricity generators and bunker fuels used by ships.

U.S. residual-fuel inventories last week rose 2 percent to 31.3 million barrels from 30.7 million barrels the previous week, which was the lowest since March 1996, according to the U.S. Energy Department. Stockpiles were down 25 percent from a year earlier and 23 percent below the five-year average.

Residual-fuel inventories declined last week along the Gulf Coast and in the Midwest, California and Northwest, government figures showed.

Inventories in the Northeast gained 3.4 percent on the previous week, the only region to show an increase. Power plants in Northeast states such as Massachusetts and New York burn 32 percent of the nation's supply of residual fuel.

Electricity plants and other industrial customers burn about 60 percent of residual fuel supplies, according to the Energy Department. The other 40 percent is used as bunker fuel.