[KevO]

$this->bbcode_second_pass_quote('', 'N')EW YORK - Domestic crude oil closed above $67 a barrel Thursday for the first time since September on continuing concerns that the refining industry is not producing enough gasoline to meet summer driving demand.

That worry, which drove gas prices at the pump to record levels last month, was exacerbated by Wednesday's government report that showed refinery utilization fell last week, and that gasoline inventories did not grow.

"This is no longer an aberration, it is an industry-wide disaster," wrote Peter Beutel, an analyst at Cameron Hanover, in a research note.

Retail gas prices, which often trail the futures market, fell again. The average national price of a gallon of gas fell 1.1 cents overnight to $3.043, according to AAA and the Oil Price Information Service. Prices peaked at $3.227 a gallon in late May.

In other Nymex trading, heating oil futures rose 5.41 cents to settle at $2.0161 a gallon while natural gas prices gained 20 cents to settle at $7.808 per 1,000 cubic feet. Natural gas inventories rose by 92 billion cubic feet last week, about 7 billion cubic feet shy of expectations, according to a report Thursday by the Energy Department's Energy Information Administration. The strong natural gas prices were also supporting oil and gasoline futures prices, Hunter said.

"People are concerned that gasoline inventories remain low," said Michael Lynch, president of Strategic Energy and Economic Research Inc., in Winchester, Mass.

Refinery utilization, which had been expected to grow by 0.8 percent, fell 0.4 percent to 89.2 percent, the second straight weekly decline, according to the EIA. Most analysts say refineries should be using 94 percent to 95 percent of their capacity at this time of year.

"There were general expectations that gasoline inventories would continue to build ... but the market didn't see it," said Victor Shum, an energy analyst with Purvin & Gertz Inc. in Singapore.

Gas inventories were unchanged at 201.5 million barrels for the week ended June 8, the EIA report said. Analysts surveyed by Dow Jones Newswires expected inventories to rise by 2 million barrels.

The refining industry is still struggling to recover from the effects of Hurricanes Katrina and Rita two years ago, analysts said.

[pup55]

The frequent viewere of PO.com have been on this for awhile.

$this->bbcode_second_pass_quote('', 'L')ynch thinks the issue is not damage from the hurricanes, but deferred maintenance. When the storms hit the Gulf Coast, refiners elsewhere had to pick up the slack. Many put off planned maintenance until this year.

[shortonoil]

pup55 said:

$this->bbcode_second_pass_quote('', 'W')hen threadbear sees this, she will say "conspiracy", but we have already pointed out that at the current pricing levels, BP is really minimally motivated to get these things up and running, particularly if they have to make some big investment to bring these plants up to code.

[AirlinePilot]

I fear that this is just the harbinger of more problems. They (BP) are just the first in line as they weren't as healthy going into the decline of Light Sweet. I know I could be wrong, but its just a hunch. I don't think that things ever really get better than where we are. Maybe its possible to jump up to the high 90's again(ref. utilization) every now and then, but somehow I doubt it. Without a major push to revamp and retool for the crappy stuff, I think we never have a chance to catch up and due to the profit motive it will be business as usual as long as possible.

We all know where that gets us.

[AirlinePilot]

$this->bbcode_second_pass_quote('shortonoil', '[')b]Threadbear could find a “conspiracy” at a Ben & Jerry’s Ice Cream store.

[Hawkcreek]

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[DantesPeak]

Well put pup55, shortonoil, ap.

Although hurricanes and lightning strikes are considered natural and unpredictable, perhaps the benign hurricane season in the late 1990s was un-natural - and we should not expect nature to be so quiet in an era of global warming.

As I said yesterday, maybe 90% refinery utilization is the most reasonable estimate we can expect in an era of diminishing quality of crude and global warming.

[Starvid]

$this->bbcode_second_pass_quote('AirlinePilot', 'I')'m off to burn some jet fuel!!