Oil Price Volatility Continues

Posted on Fri, Mar. 25, 2005


Oil price volatility continues

By Jad Mouawad

NEW YORK TIMES

It seems that oil markets can expect little relief these days.

A day after crude prices had their largest decline of the year, oil futures bounced back Thursday after an explosion at a large refinery in Texas highlighted just how tight the industry's supplies were.But as markets remained extremely sensitive to any potential disruption, they also seemed unsure what effect the blast at the refinery, the third-largest in the United States, would have on gasoline supplies.

After a day of volatile trading, crude futures on the New York Mercantile Exchange rose $1.03 to close at $54.84 a barrel. The explosion Wednesday killed 15 people and injured more than 100, the Associated Press reported Thursday. The plant in Texas City, which is owned by BP, accounts for 3 percent of the nation's refining capacity.Fears that the explosion could curtail gas supplies helped push gasoline futures in New York up 1.5 percent, to $1.599 a gallon; they touched $1.608 in earlier electronic trading, the highest since the contract began trading in 1984.

News of the explosion, which occurred minutes before the end of regular trading Wednesday afternoon, stemmed a sharp decline in oil prices. Oil futures dropped 4 percent Wednesday after a weekly report in the United States showed larger-than-expected increases in stocks.

"The blast interrupted a selling phase," said Frederic Lasserre, the head of commodity research at Societe Generale in Paris. "But other than the high human cost of the tragedy, the technical side of the explosion appears to be limited."

http://www.contracostatimes.com/mld/cctimes/business/11227494.htm