Crude surges back past $73 despite US stock builds

Crude surges back past $73 despite US stock builds

London (Platts)--11May2006

Benchmark crude prices surged to over $73/barrel in London and New York
Thursday as supply fears and refinery glitches overshadowed evidence of
growing stockpiles in the US.

Traders said prices were reacting in part to problems at Valero's 245,000
b/d Texas City refinery and ConocoPhillips' 263,000 b/d Bayway, New Jersey,
unit near the key New York Harbor pricing point.

By 1445 GMT, front month June crude on the New York Mercantile Exchange
was at $73.15/barrel, up $1.07 on the day and from $70.69/barrel at the close
of trade on Tuesday. June IPE Brent in London was up 81 cents at $73.25/barrel
at the same time.

The rally in crude prices came despite unexpected stock builds in all
categories in the latest US weekly stock data announced by the Energy
Information Administration.

The EIA reported a 300,000 barrel build in crude stocks, a 2.4 million
barrel increase in gasoline inventories and a 200,000 barrel jump in
distillates.

But in addition to the stock builds, the data also showed strong US
demand for refined products just ahead of the summer driving and Atlantic
hurricane seasons.

"Oil markets remain extremely concerned about gasoline availability in
the run up to the US driving season and despite a bigger than expected move up
in inventories yesterday, prices moved sharply higher in response to supply
hitches," Kevin Norrish, energy analyst at Barclays Capital, said in a report.

Futures traders said the increase in activity by speculators, not just in
crude but across other commodities too, had contributed to the rally.

In Nigeria, a spokesman for oil minister Edmund Daukoru said that a
militant group responsible for a spate of kidnappings and attacks on oil
facilities in the Niger Delta since January said it was not responsible for
the killing of an oil worker Wednesday.

A manager working for Baker Hughes, an oil services company, was gunned
down in Port Harcourt Wednesday on his way to his office by suspected
assassins riding a motorbike.

The spokesman also said the militant group MEND was not responsible for
the kidnapping of at least two expatriate oil workers earlier Thursday in Port
Harcourt.

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