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Gasoline prices soar on refinery troubles

NEW YORK: Gasoline prices surged to a four-year high Tuesday due to shrinking inventories of crude oil and gas and recent refinery accidents and shutdowns that threatened to further tighten supplies.

In other commodity markets, corn prices hit an all-time high before backing off on profit-taking and lumber prices sank. The Knight Ridder index of 17 commodities rose 0.17 to 252.38.

Domestic stocks of oil and gasoline fell again last week, and global supplies seem tight ahead of the third round of talks between the United Nations and Iraq over a limited sale of embargoed Iraqi oil. Negotiations so far have not reached an agreement.

After the close of trading in New York energy futures, the American Petroleum Institute said U.S. crude supplies fell 1.4 million barrels to a 19-year low of 297.8 million barrels last week, while gasoline stocks dropped 2.8 million barrels to 203.6 million barrels -- 10 million barrels below year-ago levels.

"The market is in a bullish stance and the inclusion of Iraqi crude oil may only temporarily and modestly cause the market to fall," CPC analyst Tom Curtis said. "Demand on a worldwide basis has been outstripping supply since November."

Meanwhile, explosions at Shell Oil's Martinez, Calif., refinery and at Diamond Shamrock's Dumas, Texas, refinery threatened supplies of oil products. Problems at Sun Oil Co.'s Philadelphia plant and a maintenance shutdown at one of Exxon's Baton Rouge, Louisiana refineries also supported prices at the New York Mercantile Exchange.

Shell said its Martinez refinery was in the process of restarting parts of the plant that were shut after a series of blasts Monday evening and most of its operations would resume within a few days.

But Shell said production of so-called CARB gasoline for California may be affected. The gasoline, mandated by California's Air Resources Board, is a cleaner-burning fuel that the state's motorists will be required to use. Some analysts said the fuel may be in short supply.

"They can't solve the problem the way they used to since no refiners outside of California are going to spend the money to make CARB gasoline," said one trader, noting any shortfall cannot be made up with imports from other states.

May gasoline jumped 2.11 cents on the New York Mercantile Exchange to 68.11 cents a gallon after setting a high of 68.20 cents -- a four-year high for a nearby month.

May crude oil rose 44 cents to $22.70 a barrel and May heating oil gained 1.74 cents to 59.72 cents a gallon.

Corn prices hit a record high at the Chicago Board of Trade of $4.19-1/2 a bushel before retreating as speculators took profits. The previous high set Nov. 28, 1980, was broken by one-quarter cent.

Tights supplies and booming exports continued to support the market.

May corn ended 2.25 cents lower at $4.14-1/4 a bushel, May wheat firmed one-half cent to $5.12, and May soybeans declined 5 cents to $7.56.

Lumber prices fell steeply ahead of an expected announcement on a deal over Canadian lumber exports. May lumber sagged $10 to $295.30 per 1,000 board feet.

After the close of trading, Canada and the United States announced they had settled the long-festering trade dispute with Ottawa agreeing to limit its southward exports of softwood lumber.-Reuter