Explosion at a Mexican oil refinery weighs on oil prices

09-Sep-10

An explosion at the Cadereyta refinery near Mexico's northern city of Monterrey has left one person dead and two badly burned. This has impacted oil markets as Mexico has a limited refining capacity, and this shut down could create demand. Markets were mixed at the end of the driving season that comes at a time when oil demand is weak and inventories are near or above six-year highs. New York's main contract, light sweet crude for delivery in October, dipped to US$74.09 dollars a barrel, while Brent North Sea crude for October delivery rose to US$77.7. Morgan Stanley analyst said that crude futures were likely to spend the next month "in the upper-end" of the 70-80 dollars range. Crude oil prices have been surprisingly range-bound and are likely to remain so into mid-October, before ultimately trading higher as refiners exit maintenance, bolstering crude demand and tightening inventories.