Oil Prices Rise on Supply Shortage Fears

Markets were unsettled by an array of concerns, ranging from breakdowns in U.S. refineries in the past two weeks to ongoing worries that crude oil and distillates production will not meet peak global demand in the fourth quarter.

“Looking at the overall refinery situation, I think people are still having jitters from all the recent destruction we’ve seen in the U.S.,” said Jonathan Copus, energy analyst with Investec Securities in London.

At least seven refineries have reported problems of one kind or another, ranging from fires at Chevron Corp.’s El Segundo, California, and BP PLC’s Texas City refineries to the complete shutdown of Exxon Mobil’s plant in Joliet, Illinois. Together, the troubled refineries have a capacity of 1.7 million barrels a day, some 10 percent of total U.S. refining capacity.

Aging refineries in the U.S. are running at nearly 100 percent utilization, and this increases the likelihood of operational problems as companies begin to slow down production of gasoline for summer and turn to heating oil for winter.

Yahoo! News