Oil Breaks 6-Session Losing Streak, Finishes Above $62
Crude oil and gasoline prices climbed Tuesday after the U.S. government, citing ongoing problems at the nation's refineries, said U.S. drivers will likely be paying more to fill their tanks this summer than previously forecast.
Bombings at three major oil pipelines in Nigeria also heightened supply worries in the energy market and lifted prices.
Light, sweet crude futures for June delivery rose 79 cents or 1.3% to settle at $62.26 a barrel on the New York Mercantile Exchange, and gasoline futures rose 1.49 cent or 0.7% to settle at $2.2045 a gallon .
The U.S. Energy Department Tuesday raised its outlook for the summer's average pump price by 14 cents to $2.95 a gallon, and said it projects prices, which are now above $3 a gallon, to rise above the $3 mark again in August. The report also predicted that continued growth in global oil demand would keep the oil markets tight.
The average U.S. price of gasoline Tuesday was $3.036 a gallon, according to AAA -- just about two cents short of the record high reached September 2005 after Hurricane Katrina struck the Gulf Coast.
Gasoline futures, which have soared this year as refinery shutdowns depleted U.S. inventories to levels not seen since late 2005, increased on Tuesday even though traders expect the Energy Department to report on Wednesday a rebound in gasoline inventories.
"Over the last week, there's been a lot of talk about refineries getting back on track and a potential increase in stockpiles tomorrow ... but I think near the end of the day today, investors came to the realization that even if we have a slight uptick in gasoline stocks tomorrow, we have a bullish outlook," said James Cordier, president of Liberty Trading Group in Tampa, Fla.
Analysts surveyed by Dow Jones Newswires expected gasoline stocks to rise by 370,000 barrels last week, on average, in a weekly report to be released Wednesday by the U.S. Energy Department. An increase in gasoline stocks, which would be the first in 13 consecutive weeks. Unplanned outages and scheduled maintenance at refineries, sluggish imports and strong demand have plagued gasoline supplies. There have been at least a dozen additional partial shutdowns in the U.S. and internationally that cut refining capacity.
Meanwhile, tens of thousands of barrels of crude oil have been knocked out in Nigeria just this week, keeping global supply fears alive.
"The cumulative production losses are mounting here," said Citigroup Global Markets energy analyst Tim Evans.
On Tuesday, the main militant group said in an e-mail: "Fighters of the Movement for the Emancipation of the Niger Delta attacked and destroyed three major pipelines ... We will continue indefinitely with attacks on all pipelines, platforms and support vessels."
Chief Joshua Benemesia, the head of a government-backed anti-piracy force, said he confirmed the attack with members of the Bayelsa State volunteers who were stationed in the two areas attacked, Brass and Akassa.
Eni confirmed that two pipelines had been attacked. Eni's subsidiary Agip operates the Brass export terminal, which exports 200,000 barrels of crude a day.
A bombing by the group, known as MEND, in December 2005 knocked out nearly a quarter of production in Africa's largest oil exporter which has still not been restored. The group recently claimed responsibility for the kidnapping of six foreign oil workers last week.
On the Nymex, heating oil futures rose 2.70 cents to settle at $1.8299 a gallon , and natural gas prices slipped 14.2 cents or 1.8% to $7.637 per 1,000 cubic feet .
Brent crude for June delivery gained $1.10 to $65.54 a barrel on the ICE Futures exchange in London .