Crude prices spike by over one dollar

29-Sep-05

Crude oil prices rose by over one dollar on the announcement that upto 15% of U.S. refinery capacity could be shut for at least the next couple weeks, coupled by the release of U.S. petroleum inventory report that showed a dip in crude and distillate stocks and a sharp rise in gasoline stocks. Despite the inventory rise, gasoline futures surged nearly 8%. Light, sweet crude for November delivery rose to US$66.35 a barrel on the New York Mercantile Exchange. Brent crude on London's International Petroleum Exchange rose to US$63.93. Crude contracts are expected to remain high due to approaching winter demand for distillates such as heating oil and a slow-paced recovery of refineries in the wake of Hurricanes Rita and Katrina. Refineries are squeezing out every gallon of gasoline possible, but at the expense of the other products like heating oil. Natural gas also remains a big worry because the country's ability to import liquefied natural gas is limited. Crude oil can be imported from other countries and taken from the U.S. government's emergency reserve.