Oil Trades Near $60 After Rising on Inventories, Refinery Fire

May 20 (Bloomberg) -- Oil traded little changed near $60 a barrel and gasoline extended gains after a U.S. industry report showed crude inventories declined and a fire at a Texas refinery curbed production.

The catalytic cracker caught fire at Flint Hills Resources LLC’s Corpus Christi plant, according to preliminary reports from the Texas environmental agency. U.S. crude inventories dropped 4.47 million barrels to 366.2 million barrels last week, the industry-funded American Petroleum Institute said yesterday. It was the third straight stockpile decline.

“The API numbers show a fairly sharp fall in U.S. crude inventories and gasoline inventories, so that would be supportive for oil today,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “The oil price has risen ahead of the fundamentals, so I think it may fall back in time.”

Crude oil for July delivery fell 8 cents to $60.02 a barrel at 10:34 a.m. Sydney time on the New York Mercantile Exchange. Prices are up 35 percent this year. Yesterday, the June contract gained 1.1 percent to $59.65 in its final day before expiry.

The API collects inventory information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department.

The Flint Hills refinery has a capacity of 300,000 barrels of oil a day, according to data compiled by Bloomberg. A catalytic cracker is used to make higher-value products such as gasoline and diesel.

Lower Imports

Crude-oil stockpiles dropped 1.75 million barrels in the week ended May 15 from 370.6 million the previous week, according to the median of eight estimates by analysts before an Energy Department report today. The Energy Department is scheduled to release its weekly report on supplies at 10:30 a.m. in Washington.

Inventories may fall as oil imports to the U.S., the world’s biggest crude user, decline. Supplies brought into the country fell 12 percent to 8.71 million barrels a day in the week ended May 8, the lowest since the week ended Sept. 12, the Energy Department said on May 13.

Crude oil supplies climbed to 375.3 million barrels during the week ended May 1, the highest since September 1990, according to the department.

U.S. gasoline inventories dropped 5.4 million barrels to 206.2 million barrels, the API said.

Refinery Rates

Refineries probably operated at 84.1 percent of capacity last week, up 0.4 percentage point from the previous week, according to the median of responses in the survey. Refinery operations usually climb for the peak gasoline-consumption period, which lasts from the Memorial Day weekend in late May to Labor Day in September.

Sunoco Inc. shut a gasoline-making unit at its Marcus Hook, Pennsylvania, plant following a fire. Valero Energy Corp’s Delaware City, Delaware, plant released sulfur dioxide from its fluid catalytic cracking unit yesterday, according to a filing with Delaware state regulators.

Gasoline for June delivery gained 1.5 cents to $1.8275 a gallon in New York at 10:02 a.m. Sydney time. Yesterday it rose 3.1 percent to $1.8125, the highest settlement since Oct. 14.

Oil’s gains yesterday were aided by the dollar’s slump against major currencies, which bolstered demand for commodities as an alternative investment. The dollar traded at $1.3630 per euro at 6:14 a.m. in Tokyo, after falling 0.5 percent yesterday.

“The U.S. dollar was soft and gasoline prices were higher because of disruptions to a couple of refineries in the U.S.,” Moore said. “That had an upward pull on the oil price.”

Brent crude for July settlement fell 2 cents to $58.90 a barrel on London’s ICE Futures Europe exchange at 10:22 a.m. in Sydney. It rose 45 cents, or 0.8 percent, yesterday to $58.92, the highest settlement since Nov. 10.