"The US refinery utilization rate is still the most powerful driver on the supply side," said analysts at Société Générale Group. They noted "not a single day [goes by] without news of a US refinery experiencing unexpected problems."

In the Houston office of Raymond James & Associates Inc., analysts noted that Valero Energy Corp."s 295,000 b/d refinery in Port Arthur, Tex., had a compressor failure over the weekend that caused flaring at the facility. "The market"s reaction to these refinery problems stems from the current tightness in gasoline supplies, with inventories at 7.5% below the 5-year average," they said.

Meanwhile, Société Générale analysts said, "The economic outlook is improving faster than expected in the US. May is traditionally a trendless month before June gives the tone for third quarter [market activity]. Temperatures won"t be a driver until July and [the start of] a widely telegraphed "active hurricane season" in the US."

Energy prices

The June contract for benchmark US light, sweet crudes closed at $64.94/bbl May 18 on the New York Mercantile Exchange, up 8¢ for the day after touching $65.64/bbl in intraday trade—the highest level since May 1. The July contract gained 6¢ to $65.98/bbl.

On the US spot market, West Texas Intermediate was up 8¢ to $64.95/bbl. The June contract for reformulated blend stock for oxygenate blending (RBOB) dropped 2.89¢ to$2.41/gal on NYMEX. Heating oil for the same month lost 2.15¢ to $1.92/gal. The June natural gas contract fell by 13.1¢ to $7.94/MMbtu on NYMEX. It increased on the US spot market, however, up 18¢ to $7.89/MMbtu.

In London, the July IPE contract for North Sea Brent crude dropped 85¢ to $69.42/bbl. Gas oil for June increased by $3.25 to $602.25/tonne.

The average price for the Organization of Petroleum Exporting Countries" basket of 11 benchmark crudes gained 74¢ to $65.88/bbl on May 18.

PIN/OGJ.COM