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Gas futures climb on lower supply forecast

NEW YORK -- Gasoline futures rose yesterday amid expectations that today's weekly snapshot of US inventory data will show gasoline supplies at near critical levels, largely due to a shortage of production in the Gulf Coast caused by Hurricane Katrina. Crude futures fell after a volatile session.

Analysts said they believe the current inventory loss will only have short-term effects on the US economy, however.

Gasoline futures rose almost 2 cents to $1.8916 a gallon while heating oil gained about 3 cents to $1.8402 a gallon. The average retail price of unleaded gasoline was about $2.96, a cent lower than the day before.

Light, sweet crude for October delivery on the New York Mercantile Exchange fell 23 cents seesawing throughout the session in New York.

October Brent crude oil futures fell 19 cents to settle at $61.61 a barrel on London's International Petroleum Exchange.

Last week, an Energy Department report predicted a 100,000 barrel per day increase in US petroleum demand this year, down from 160,000 barrels per day a month earlier. This was ''largely due to sharply higher prices," the department said.

But ahead of today's release of the latest US inventory figures, Vienna's PVM Oil Associates said that -- while stock reductions should not exceed expectations -- gasoline supplies could slump to a ''critically low level" close to 185 million barrels -- the minimum cushion considered as necessary by the industry.

Analysts predict today's release will report a 3 to 6 million barrel drop in gasoline inventory because of the continued refinery outage, and a drop in demand due to high prices.

A 5 to 7 million barrel drop is expected in crude oil, largely because of shipping delays into the Gulf of Mexico, Ed Silliere, vice president of risk management at Energy Merchant LLC in New York said yesterday.

Nymex crude has dropped from its intraday high of $70.85, reached Aug. 30 after Katrina hit, but remains over 40 percent higher than year-ago levels.

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