Oil up as refinery problems stem crude's slide
NEW YORK (Reuters) - Crude oil prices rose on Tuesday, pulling out of a nosedive after news of refinery problems in the United States rekindled supply worries during the summer driving season.
U.S. crude oil futures CLc1 rose 36 cents to $72.42 a barrel by 12:30 p.m. EDT, ending a slide of more than $6 from last week's record amid economic worries. London Brent LCOc1, meanwhile, rose 63 cents to $71.80 a barrel.
Sources said ConocoPhillips shut processing units at two oil refineries on the U.S. East Coast for repairs, including a unit at its big Bayway plant in New Jersey. A ConocoPhillips official was not available to comment.
"The market was rallying on the Conoco Bayway (gasoline unit) problems," said Nauman Barakat, senior vice president at Macquarie Futures USA.
Shutdowns at oil refineries in the world's largest energy consumer have kept supplies tight since spring, contributing to a record run in gasoline prices to well above $3 a gallon.
U.S. gasoline purchases slipped last week, but still logged their third-highest rate since September 2005, according to a MasterCard SpendingPulse report Tuesday.
Oil prices had fallen below $72 a barrel earlier on Tuesday, extending the previous session's near 5 percent plunge sparked by concern about the U.S. economy and falling equity markets. Oil prices are roughly 8 percent below the record $78.77 hit last Wednesday.
The U.S. subprime, or risky, mortgage crisis has rattled credit and stock markets and is spilling over into commodities, analysts say. Some investors say oil may head lower still in the near term.
"It might get to the high $60s. High $60s, low $70s is a healthy level. That is a level the world economy is happy with," said Badung Tariono of ABN Amro Asset Management.
The U.S. Federal Reserve on Tuesday kept interest rates unchanged amid continued inflation risks. A cut in interest rates would have encouraged faster economic growth.
Despite the slide from last week's record, oil remains up from about $50 in January due to real and threatened disruptions to crude oil supply, constraints at oil refineries, resilient demand and a flow of investor money into commodities.
The reluctance of the Organization of the Petroleum Exporting Countries, which began curbing supply late last year, to increase crude output has also limited price declxines.
U.S. oil supplies likely fell for the fifth straight week last week, down 2.7 million barrels, as U.S. refiners boosted production of finished fuels, according to a Reuters survey. <EIA/S>
The U.S. Energy Information Administration will release its next snapshot of oil inventories Wednesday morning.
(Additional reporting by Alex Lawler in London)
