Gasoline prices fall, but oil futures rise despite ample supplies
There were ample supplies of both crude oil and gasoline in the U.S., but the price of oil climbed Monday and managed to regain the $79- to $80-a-barrel level. Gasoline prices fell in California and nationally.
Analysts said that oil’s ability to remain high despite a variety of negative economic indicators, as well as retail gasoline’s inability to escape its own demand fundamentals, were among the reasons that some U.S. refineries have been shut down or idled.
On Tuesday, the nation’s No. 2 oil company announced it would restructure its refinery business.
San Ramon-based Chevron Corp. told employees Monday that its downstream business needs to be “a leaner operation with fewer positions and fewer employees,” spokesman Lloyd Avram said. Details on the number of layoffs and the facilities that would be vacated would be ready by March, Avram said.
Pump prices in California fell, on average, by two cents a gallon to $3.026 over the last week, according to the Energy Department’s weekly survey of filling stations, which was released Tuesday because of the Martin Luther King Jr. holiday. Nationwide, the average price of a gallon of regular gasoline dropped 1.2 cents to $2.739.
But crude oil futures for February delivery rose $1.02, or 1.3%, to settle at $79.02 a barrel Tuesday at a time when some analysts said that demand for oil should restrict the price to the $50-to-$55 range.
U.S. crude inventories rose 2.5 million barrels last week as refinery use fell and imports increased. Stores of refined distillate and gasoline also rose.
“Excess refining capacity and continued weak demand left refiners unable to raise petroleum product prices in line with the surge in crude oil prices,” said Fadel Gheit, senior energy analyst for Oppenheimer & Co., who said oil prices should be no more than $55 a barrel.
“The major oil companies can still make money selling oil, and they are better off cutting their losses on refining,” Gheit said.
Deutsche Bank analyst Paul Sankey said that in the closing months of last year, Chevron was losing $600,000 a day on its refinery operations.
In recent months, Valero Energy Corp. of San Antonio announced that it was closing its 192,000-barrel-a-day Delaware City Refinery. Sunoco Inc. of Philadelphia is idling its 145,000-barrel-a-day Eagle Point refinery in New Jersey.
Currently, there are 13 oil refineries operating in California, including two of Chevron’s. One is in El Segundo and the other is in Richmond, north of Oakland.
