May 2, 2008

LESS PRESSURE ON GASOLINE PRICES? This is from a petroleum industry newsletter I get:

A surprising build in crude oil highlighted this week’s national inventory statistics. Crude oil built by +3.8 million barrels when only a slight +.3 million barrel build was anticipated. Likewise, distillate built by 1.1 million barrels (vs. a pre-stat guess of -.1 million) for the first sizable build in stocks since the second week of January. More builds are anticipated as we enter the month of May, the lowest demand month of the year. Refinery run rates were able to hold on to last week’s huge increase by only dropping .2% to remain at 85.4%. Maintenance programs are winding up, so more refinery recovery should be in store.

That’s good news. On the other hand, there’s this:

Two worker strikes, combined with a bit of sabotage, idled as much as 2 million barrels per day of production capacity in the UK and Nigeria. The UK strike at Grangemouth looks to be settled. Workers were called off for 48 hours, effectively slicing 700,000 barrels per day of production. In Nigeria, a strike against ExxonMobil’s Bonny Light field idled almost 900,000 barrels per day. As part of the negotiation, it appears that workers were going to return, but as of press time I haven’t found evidence of that as yet. The state owned oil company, NNPC, is more than urging the sides to get back to the table quickly. The strike is having the biggest impact of any strike since 1994 and has cost the government billions of dollars in lost revenue. What’s the status of the rest of the volume? That’s from the ultimate strike…blowing up their own oil pipelines and infrastructure.

So that’s not so good. But it wouldn’t surprise me to see crude oil prices fall a bit in the next few months.

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