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Oil Prices Steady Under $62 a Barrel

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07 May 2007 @ 11:13 pm EST
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SINGAPORE - Oil prices were nearly flat in Asian trading Tuesday amid forecasts that a midweek U.S. government report would show an increase in domestic gasoline inventories.

Light, sweet crude for June delivery added 8 cents to $61.55 a barrel in electronic trading on the New York Mercantile Exchange midmorning in Singapore. The contract fell 46 cents a barrel to settle at $61.47 on Monday.

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, could help assuage supply concerns ahead of the peak demand summer driving season, which begins on Memorial Day weekend at the end of May. Unplanned outages and scheduled maintenance at refineries, sluggish imports and strong demand have plagued gasoline supplies.

"The market must believe that we will see increased gas production and imports in short order or they must be thinking that demand will flatten out. But what ever they might be thinking, the current supply of gasoline is unacceptable," wrote Phil Flynn, an analyst at Alaron Trading Corp. in Chicago, in a research note.

There have been at least a dozen additional partial shutdowns in the U.S. and internationally that cut refining capacity.

For instance, one of America's largest refineries, a BP PLC plant in Indiana that processes more than 400,000 barrels of oil per day, will not be operating at full capacity for several months because of unexpected repairs.

Other examples include a 170,000-barrel-per-day plant in McKee, Texas, that was shut down for a month, and a 470,000 barrel-per-day plant in Texas City operating at less than half of capacity.

Heating oil futures rose 0.36 cent to $1.8065 a gallon while natural gas prices dropped 2.5 cents to $7.754 per 1,000 cubic feet.

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