Gasoline Futures Surge Nearly 7 Percent

By BRAD FOSS

WASHINGTON – Gasoline futures surged nearly 7 percent Tuesday on word of a large refinery snag, marking an almost 50-cent-per-gallon increase over the past month that is sure to send pump prices higher.

"We are looking at retail prices that will soon be above $2.50 gallon nationally, and could perhaps eclipse the $2.60 per gallon" level, said analyst Tom Kloza at Wall, N.J.-based Oil Price Information Service.

The average retail price of unleaded gasoline was $2.37 a gallon last week – the highest level since November, according to the Energy Department.

Gasoline futures rose 12.27 cents to settle at $1.866 a gallon on the New York Mercantile Exchange. Brokers said the rally was sparked after Amerada Hess Corp. said Tuesday that over the weekend it unexpectedly shut a gasoline producing unit at a refinery in St. Croix that it co-owns with Petroleos de Venezuela SA. The spokesman said repairs to the unit, which refines roughly 150,000 barrels of crude per day, could take up to two weeks.

"I don’t think anybody was expecting to see that at the start of the day," said Tom Bentz, a broker at BNP Paribas Commodity Futures in New York. "The gasoline market has been pretty strong recently anyway because we’re getting into the peak turnaround season."

The so-called turnaround season is when refiners shut down their plants to perform maintenance ahead of summer, which is traditionally the busiest period for gasoline production. It often causes supplies to tighten and prices to rise.

A month ago, gasoline futures settled at $1.38.

Also putting some upward pressure on prices on Tuesday were analysts’ expectations that U.S. government data scheduled to be released Wednesday will show a decline in gasoline inventories from a week ago.

Light sweet crude for April delivery gained $1.33 to close at $63.10 a barrel on Nymex. On London’s ICE Futures exchange, crude oil futures gained $1.71 to $63.91 per barrel.

Meanwhile, the International Energy Agency, a watchdog for the world’s energy consumers, on Tuesday lowered its 2006 oil demand estimate by 290,000 barrels per day because of persistently high fuel prices and slowing consumption in Southeast Asia.

Nymex oil prices had surged $1.81 on Monday to settle at $61.77 on nagging concerns about unrest in Nigeria and the possibility of U.N. sanctions against Iran, the No. 2 producer within OPEC, for its nuclear ambitions.

In Nigeria, recent attacks by militants on pipelines and oil facilities have left the country’s production down by about 400,000 barrels a day.

"We would expect the potential for further chaos in Nigeria to provide a floor for prices around $60 a barrel, and we expect Nigeria will continue to be a major issue in terms of supply security up to, and probably beyond, next year’s elections," wrote Barclays Capital’s analysts in a research note.

In other Nymex trading, heating oil futures climbed 8.34 cents to finish at $1.8212 per gallon, and natural gas futures rose 16 cents to close at $7.167 per 1,000 cubic feet.