Crude Oil Rises From 7-Month Low After U.S. Refinery Accident
2006-10-04 19:42 (New York)


By Angela Macdonald-Smith
Oct. 5 (Bloomberg) -- Crude oil rose from a seven-month low
after a shutdown at a Texas refinery and a government report
showed that U.S. refining units are operating at the lowest rate
since May.
Valero Energy Corp.'s refinery in Houston had a chemical
spill yesterday and the 130,000 barrels-a-day plant is to be shut
for 40 days starting this month to perform maintenance, the
company said yesterday. Oil earlier yesterday fell below $58 a
barrel after an Energy Department report showed an unexpected
gain in U.S. inventories.
``We might see a positive impact on oil prices, they need
all the help they can get,'' said Gavin Wendt, senior resources
analyst at Fat Prophets Funds Management in Sydney. ``Hopefully
we should see some stability in the price around about that $59 a
barrel mark.''
Crude oil for November delivery rose as much as 48 cents, or
0.8 percent, to $59.89 a barrel in after-hours electronic trading
on the New York Mercantile Exchange. It was at $59.77 at 7:36 a.m.
Singapore time.
Yesterday, oil jumped 73 cents, or 1.2 percent, to $59.41
after earlier touching $57.75, the lowest since Feb. 16. Futures
have declined 24 percent from a record $78.40 a barrel on July 14
as tensions in the Middle East eased and fuel stockpiles
increased.
U.S. refineries operated at 89.9 percent of capacity last
week, the lowest since May, according to the energy department
report yesterday. Analysts expected refineries to operate at 91.6
percent.

OPEC Cuts

Oil also rose amid increasing speculation that more members
of the Organization of Petroleum Exporting Countries will join
Nigeria and Venezuela in implementing voluntary output cutbacks.
Kuwait's Oil Minister Sheikh Ali-Jarrah al-Sabah said yesterday
his country will support a cut in production ``if it's for the
benefit of the market.''
OPEC has informally agreed it needs to cut output by at
least 1 million barrels a day, or at least 4 percent, to halt the
decline in prices, the Financial Times said, citing people in the
group it didn't name. Saudi Arabia, the group's biggest producer,
is unhappy with the move toward voluntary cuts, yet has already
reduced output by 200,000 barrels a day over the past two months,
it said.
``We've got the prospect I believe toward the end of the
year of further OPEC production cuts,'' Wendt said. ``Typically
they've been typically proactive in managing oil prices. I think
we'll see them step into the market once again if that price
hovers around the $60 a barrel mark.''

--Editor: Russell.