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September 13, 2007

Oil Closes Above $80 For First Time Peak Oil

Another day, another record oil price. Bloomberg:

Crude oil rose, closing above $80 a barrel in New York for the first time, after Hurricane Humberto shut three refineries in Texas.

Gasoline gained, pulling oil higher, as the storm knocked out power at plants in Port Arthur, Texas, owned by Total SA, Valero Energy Corp. and Royal Dutch Shell Plc. The plants can process a combined 850,000 barrels of crude oil a day.

"We don't have the ability to lose any refining capacity, especially since refineries are shutting for maintenance ahead of heating-oil season," said Peter Beutel, president of Cameron Hanover Inc., a New Canaan, Connecticut, energy consultant. [...]

Crude oil for October delivery advanced 18 cents to settle at $80.09 a barrel at 2:59 p.m. on the New York Mercantile Exchange, a record close. Futures touched $80.20, the highest intraday price since trading began in 1983. Prices are up 25 percent from a year ago. [Emphasis added]

Something of a non sequitir there: loss of refineries could contribute to higher gasoline prices, but it's hard to see why it would cause crude oil prices to climb. It might actually have the opposite effect, as reduced refining capacity would tend to allow inventories of unrefined crude oil to grow in the backlog. As usual, analysts reach for something in the day's news to explain the day's trading, ignoring the fact that larger forces are at work.

Posted by Jonathan at September 13, 2007 05:07 PM  del.icio.us digg NewsVine Reddit YahooMyWeb