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OIL AND GAS
U.S. gasoline prices hold steady
by Daniel J. Graeber
Washington (UPI) May 10, 2016


Oil prices up on lingering threats to production
New York (UPI) May 10, 2016 -Militancy in the oil-rich Niger Delta and ongoing production outages in Canada helped lift crude oil prices higher in early Tuesday trading.

"It's not yet safe to return," Alberta Premier Rachel Notley said in the latest provincial update on fires raging through the Fort McMurray area. More than 750 square miles of land has burned and most oil companies said that, while the immediate threat is subsiding, their operations remain closed.

Nexen, a subsidiary of the China National Offshore Oil Corp., said the status of its facilities in the region is unknown.

Crude oil prices inched lower Monday after Canadian company Suncor noted fires were moving east and away from its facilities, though provincial authorities said they expected the blaze to spread Tuesday.

The price for Brent crude oil edged up 1.4 percent to start the day in New York at $44.27 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, gained 0.3 percent to open at $43.59 per barrel.

According to S&P Global Platts, fires in Alberta, raging since May 1, have sidelined an estimated 1 million barrels per day in Canadian oil production, which could put pressure on a U.S. market that counts Canada as its No. 1 supplier.

Shortages in Canada had been offset by inventory builds elsewhere in the global energy market. Analysts surveyed by Platts said they expected U.S. crude oil stocks will show an increase of 300,000 barrels.

Pressure outside of North America, however, has emerged as militants force evacuations from the oil-rich Niger Delta. A group calling itself the Niger Delta Avengers has targeted oil installations in the region, forcing several international oil companies to curb production from Africa's largest oil producer.

Eugene Lindell, an analyst with JBC Energy in Vienna, was quoted by Nigerian newspaper Punch as saying chronic security issues in Nigeria are causing oil companies to reconsider their future.

"If it continues like this, there are companies who will probably not consider Nigeria," he said.

Retail gasoline prices in the United States remain relatively stable as markets tilt toward balance, though motor club AAA said that could end come summer.

AAA reports a national average retail price for a gallon of regular unleaded gasoline at $2.20 for Tuesday, slightly less than the previous day and 0.7 percent, or 2 cents, lower than one week ago.

Prices started moving higher in the spring as refineries made the shift to a summer blend of gasoline, which is more expensive to produce because of additional environmental safeguards. As one blend moved out of the market and the other moved in, market dynamics became skewed.

"The national average price of gas declined slightly on the week, and it is possible that prices have begun to stabilize as refineries increase production to meet record-high demand," the motor club said in its weekly market report.

Gregg Laskoski, a senior analyst with GasBuddy, said the leveling in retail prices at the pump may be reflecting balanced pressures in the crude oil market.

"Since February, retail gasoline has consistently mirrored the movement of West Texas Intermediate crude oil, with each increase followed by a short plateau and that appears to be where we are today," he said in a statement emailed to UPI.

Crude oil prices have remained relatively flat near the $40 range for much of the late spring as supply strains balance against signs the U.S. economy is slowing down. Data last week from the U.S. Labor Department showed employment uneven across many economic sectors.

Consumers, nevertheless, are taking advantage of lower gasoline prices, which are 17 percent, or 45 cents, less than this date in 2015. AAA said gasoline demand is "well above" what it was at this time last year.

This demand, the motor club said, has yet to put a crimp on gasoline supplies, meaning retail prices should remain relatively stable in the short term.

"Lower gas prices are contributing to drivers taking to the roads at record levels and the 2016 summer driving season is expected to rival 2007 when gasoline demand hit an all-time high," it cautioned.

Oklahoma had the lowest state average price at $1.95 per gallon.


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