Oil prices soared above $60 a barrel as a rash of snags affecting U.S. oil refineries, pipelines, and an oil field sparked worries of a supply crunch in the world's biggest energy consumer.
March crude in New York settled up $1.22 or 2.1% at $60.07. Oil traded in a wide range from as low as $58.07 overnight up to $60.63 around 2:00 p.m. New York time.
"Prices jumped here on refinery and pipeline issues," said Kyle Cooper, director for research at IAF Advisors.
A key fuel pipeline supplying the U.S. Northeast with gasoline and diesel was shut down due to a spill in Indiana, the line's operator TEPPCO said today, pushing up fuel prices in the region.
NYMEX March RBOB (unleaded gasoline) settled up 5.56 cents or 3.4% at $1.7047, after trading from $1.64 to $1.7150, the highest price in two months.
Technical resistance was broken at $1.70, with support charted at $1.60.
NYMEX March heating oil gained 3.66 cents or 2.2% to $1.6816. It traded between $1.6273 and $1.6970. Resistance was charted at $1.70. Support was slated at $1.60.
Meanwhile, a fire over the weekend at Valero Energy oil refinery on the Texas panhandle was expected to leave the plant shut for several weeks, cutting back fuel
production roughly 170,000 barrels per day, the company said.
The outage comes amid a raft of other refinery problems in North America, including a recent fire at Imperial Oil's plant in Nanticoke, Ontario, that have raised worries of a crunch when driving demand picks up this spring.
Adding support to prices, oil major BP said it shut its Northstar oil field in the Beaufort Sea off Alaska for unplanned repairs that could keep it out of service until next week. The field has a capacity to produce nearly 50,000 barrels of oil per day.
A roller-coaster seven months have taken U.S. oil prices from a record $78.40 last July to a 20-month low of $49.90 in January when unusually mild weather and a speculative fund sell-off dragged the market lower.
Since then rising political tension involving Middle Eastern and African oil producers and reduced output from the Organization of the Petroleum Exporting Countries have provided some support for prices.
OPEC member Iran, the world's fourth biggest oil exporter, vowed today to press on with its nuclear fuel program, ignoring a U.N. deadline to freeze uranium enrichment or face broader sanctions, but it offered to guarantee it would not try to develop nuclear weapons.
Tensions are also rising in Africa's biggest producer Nigeria, also a member of OPEC, ahead of April elections. Militant attacks have already shut a fifth of output.
OPEC next meets in Vienna on March 15 when it will probably leave its supply levels unchanged, Nigeria's energy minister said today.