Oil Testing $117.00 Today-Natural Gas $10.57Oil Rises to Record on Signs Stronger Economy May Boost Demand
By Margot Habiby
April 18 (Bloomberg) -- Crude oil climbed to a record $116.50 a barrel in New York on signs that a strengthening economy may boost demand.
U.S. stocks were poised for the best week since February following earnings reports from Citigroup Inc., Google Inc. and Caterpillar Inc. that exceeded analyst estimates. Refineries operated at 81.4 percent of capacity last week, the Energy Department reported, the lowest since October 2005.
``The real gloomy scenario has been sort of ameliorated with some of these very positive earnings and the indication that the worst is behind us,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``There will be an uptick in energy demand with the renewed economic outlook for the second half of the year in particular.''
Crude oil for May delivery rose $1.26, or 1.1 percent, to $116.12 a barrel at 2:12 p.m. on the New York Mercantile Exchange. Prices are up 5.4 percent this week and 83 percent from a year ago.
U.S. Energy Secretary Samuel Bodman said today that the government will continue to buy oil for the Strategic Petroleum Reserve, even with prices over $100 a barrel. Bodman, who spoke to reporters after a speech in Virginia, said the U.S. needs a 90-day supply of oil in reserve and currently has 55 to 56.
U.S. fuel consumption fell 1.4 percent in the first quarter, compared with a year earlier, the American Petroleum Institute said on April 16.
Deliveries of petroleum products, a measure of demand, declined to an average 20.48 million barrels a day in the quarter, from 20.77 million barrels last year, according to a monthly report from the industry-funded group. Demand in March averaged 20.37 million barrels a day, down 0.8 percent from a year earlier.
Gasoline supplies have fallen for the past five weeks to the lowest since January as refiners cut their processing rates.
Ripping Through Storage
``The 81 percent refinery run rate could have us quickly ripping through our gasoline storage, particularly as the driving season picks up, which it will despite the high pump price,'' Kilduff said.
The peak gasoline consumption period in the U.S., known as the summer driving season, extends from Memorial Day at the end of May through Labor Day at the beginning of September.
Brent crude oil for June settlement rose 94 cents, or 0.8 percent, to $113.37 a barrel on London's ICE Futures Europe exchange. Earlier, it touched a record $113.75.
The main militant group in Nigeria's oil-rich Niger Delta said that it sabotaged a pipeline operated by a unit of Royal Dutch Shell Plc yesterday.
Earthquake
A 5.2-magnitude earthquake in Illinois, the state's most powerful on record, raised concern earlier today that it may have affected regional refinery operations.
Marathon Oil Corp., the largest refiner in the U.S. Midwest, shut its Potoka crude oil pipeline as a precaution after the quake struck, though it has since returned the line to service, said Linda Casey, a spokeswoman, in a telephone interview.
Marathon's 213,000 barrels a day refinery in Robinson, Illinois, wasn't affected, she said. Neither were regional facilities run by Valero Energy Corp., BP Plc and CountryMark Cooperative, the companies said.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
Last Updated: April 18, 2008 14:24 EDT
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