|09-06-2005, 05:05 PM||#1|
Join Date: Jun 2000
Location: Cincinnati, Ohio
Oil Prices Fall, Pump Prices Seen Dropping
NEW YORK - Oil futures fell Tuesday as some Gulf Coast petroleum operations hobbled by Hurricane Katrina slowly recovered and analysts predicted that pump prices, now averaging more than $3 a gallon, would also begin to decline.
But another financial pinch shaping up for U.S. consumers and businesses in the months ahead is the high price of natural gas, analysts said. And with oil prices still trading above $66 a barrel, European and Asian economic leaders warned Tuesday that their own growth was likely to slow.
In New York, light sweet crude for October delivery was down $1.12 to $66.45 a barrel in morning trading on the New York Mercantile Exchange, which was closed Monday for Labor Day. Crude futures also fell on Friday, when industrialized nations announced plans to supply the market with 2 million barrels per day of crude oil and motor fuels, including gasoline and diesel.
Gasoline futures declined by 3.77 cents to $2.1460 a gallon on Nymex, but that still leaves them up 16 percent from a month ago.
"We'll go below $3 a gallon, but not by much" said oil analyst John Kilduff at Fimat USA in New York.
While oil pipelines, import terminals and refineries have restarted operations, four damaged Gulf Coast refineries look likely to remain shut for weeks or even months, analysts said, taking with them more than 5 percent of U.S. capacity. The emergency supply of refined products coming from Europe will help, analysts said, but it will be more than a week before shipments begin arriving and inventories of gasoline and heating oil are likely to be tight for months.
Another knotty problem, Kilduff said, is the potentially long-term loss of natural gas production in the Gulf of Mexico. The U.S. does not have an emergency stockpile of natural gas, as it does for crude oil, and the country's capacity for importing liquefied natural gas is limited.
"Natural gas is the one commodity here that I have very little to say about in the way of good news," Kilduff said. On Tuesday, natural gas futures were down 7.1 cents at $11.62 per 1,000 cubic feet, but they are roughly double year-ago levels.
Kilduff said his company's forecasting models show the potential for natural gas futures to climb to $15 per 1,000 cubic feet in a matter of weeks, depending on how bad the damage is to underwater pipelines in the Gulf of Mexico.
Concerns about high energy prices are not limited to the U.S.
The chief economist of the Organization for Economic Cooperation and Development said the financial pain high energy prices have inflicted on consumers and businesses is far from over.
"There is a major shock, and there is no evidence it has reached its conclusion," Jean-Philippe Cotis said during a news conference in Paris.
The European Commission said high energy prices threaten the continent's already faltering bid at far-reaching reforms to become a more dynamic economy in the years ahead.
"The present very high oil prices are without doubt of concern to the European Union," EU Energy Commissioner Andris Piebals said in Brussels. He said the EU's executive European Commission was concerned about an impact not only on the well-being of "EU citizens but also regarding their effect on economic growth."
In London, Brent crude futures climbed 46 cents to $65.31 per barrel on the International Petroleum Exchange.
Meantime, Pacific Rim finance ministers are concerned about the impact of high oil prices and will emphasize the need to bolster both production and refining capacity when the 21-member Asia-Pacific Economic Cooperation forum meets this week, according a draft version of their joint statement.
"We discussed the risks of sustained high energy prices to economic growth and ongoing development in the APEC economies," said the draft, obtained by The Associated Press.
While half of the refineries shut down by Hurricane Katrina are restarting their operations, almost 70 percent of normal oil production and half of the natural gas output remains shut down, according to the U.S. Minerals Management Service, which says activity is slowly recovering.
Eight major refineries that produce gasoline, diesel, jet fuel and heating oil were knocked out of commission and the output at two others was cut by last week's killer hurricane and the flooding that followed. That cut overall U.S. refining capacity by more than 10 percent and contributed to a surge in retail gasoline prices and spot shortages around the country.
Major pipelines that carry fuel from the Gulf Coast to markets up and down the East Coast, which had been shut down for days due to power outages, are now back in action.
Associated Press Writers George Jahn in Vienna, Austria, and Kelly Olsen in Seogwipo, South Korea, contributed to this report.
This is the Cal Ripkin Jr. of typos.
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