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Oil markets ‘over-supplied, refineries are the problem’ |
| Al-Attiyah: You can buy a lot of crude … where do you refine it? |
WASHINGTON: World crude-oil markets are “over-supplied,” and high gasoline prices are the result of few available refineries, Qatar’s deputy premier and energy minister has said.
“The problem is not the shortage of crude oil,” HE Abdullah bin Hamad al-Attiyah told reporters at a news conference in Washington yesterday.
“The problem the whole world is facing today is the limitation of refineries.”
The average US pump price for regular gasoline has risen 18.5¢, or 6.4%, in the past two weeks. Prices reached $3.054 a gallon in the week ended yesterday, according to an Energy Department report.
That is the highest since a record $3.069 on September 5, 2005, after Hurricane Katrina damaged refineries and platforms along the Gulf of Mexico coast.
Asked whether the 12-member Opec should increase production to ease gasoline prices, al-Attiyah said he talks with his customers daily and they do not need more crude oil.
“We believe the market is over-supplied,” he said. “You can buy a lot of crude oil,” said al-Attiyah. “Where do you refine it?”
Qatar pumped 800,000 barrels a day of crude oil in April, according to data compiled by Bloomberg, making it the smallest producer in Opec.
Al-Attiyah met US Energy Secretary Samuel Bodman yesterday.
Bodman agreed that the problem of high gasoline prices arises from a lack of available refineries.
“The bottleneck in this country has been refining capacity,” he said. He did not however agree with al-Attiyah’s contention that the markets are over-supplied.
“I think that the supply is adequate,” said Bodman. “I wouldn’t say the world is awash in crude oil.”
Their views came as oil prices rebounded yesterday to over $65 a barrel as fresh attacks on Nigeria’s oil industry deepened supply losses, interrupting a six-day losing streak that had driven prices to their lowest since March 26.
Adding to oil’s gains, prominent US storm forecasters said there was an above-average chance a major hurricane would hit the US Gulf Coast this year, reviving memories of storms in 2005 that knocked out a quarter of US fuel production.
London Brent crude, currently seen as more representative of the global market than US oil, was up $1.12 at $65.56 after an 87¢ drop on Monday that took six-day losses to nearly 6% or $4.
US crude was up 83¢ at 62.30, having hit its lowest since March 22 in the previous session.
Militant raids have now shut 844,000 barrels per day (bpd), or 28%, of output in Nigeria, Africa’s biggest producer. Fighters from the Movement for the Emancipation of the Niger Delta (MEND) said yesterday they had destroyed three major oil pipelines.
MEND said Agip’s Brass terminal, which normally exports about 200,000 barrels per day (bpd), had been affected.
The Italian firm said it was forced to close down all 150,000 bpd of oil production feeding the Brass export terminal.
Olivier Jakob, an analyst at Swiss-based Petromatrix, said developments in Nigeria were the market’s main focus.
There had been optimism in some quarters that Nigeria’s presidential election last month would mark the start of a recovery for the country’s oil industry.
“With the negative correction that we had over the last six days, we would expect to see more short covering starting to materialize when/if the attacks are confirmed by the operators,” Jakob said in a research note.
The latest Nigeria unrest comes a day after villagers with machetes and sticks forced Chevron Corp to shut down an oil production site pumping 42,000 bpd.
Oil was also supported after forecasters from Colorado State University and AccuWeather said there was an above-normal chance a hurricane would hit the Gulf Coast.
“The probabilities for this year are well above average,” said Colorado State Univers-ity’s Philip Klotzbach. “The idea is, with a more active season, there is a much higher possibility of landfall.”
Some analysts said oil’s recent slide - its longest losing run since early September, but not its steepest - was aided by soaring metals markets, which have captured investor attention and limited any bargain-hunt buying. – Reuters
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