Oil price firms on refinery shutdown

Oil price firms on refinery shutdown

Agence France-Presse, London

The price of oil firmed in early trading here Thursday on news of a Venezuelan refinery shutdown and a cold weather forecast in the United States, dealers said.

Reference Brent North Sea crude oil for December delivery rose to US$25.64 a barrel by early afternoon here from $25.30 at the end of trading on Wednesday, the lowest closing level since Aug.8.

In New York, the benchmark light sweet crude December contract lost five cents to $26.81 a barrel on Tuesday, the lowest close since Aug.9.

"I think there's a combination of fundamental news offering a little bit of support to the market, and we're just seeing a bit of a correction today," said trader Jim Chilcott at the GNI brokerage.

"There's a refinery down in Venezuela and a cold weather snap forecast in the States," he said.

The GNI brokerage said that the 335,000 barrels per day (bpd) refinery on the island of Curacao was forced to shut down six primary distillation units following a boiler failure on Wednesday.

The boilers account for around a third of refinery capacity, and the plant was running at around 200,000 bpd at the time of the failure, with the disruption expected to last four to five days, it added.

Traders said that signs of progress in talk at the United Nations Security Council had limited gains in the oil price.

The United States said Wednesday it expected negotiations at the United Nations on disarming Iraq to end late next week, but it would not let its hands be bound in a search for compromise.

"We are narrowing the differences and I think we are getting much closer," Secretary of State Colin Powell said as members of the UN Security Council held another full round of consultations on a U.S. draft resolution.

The draft would allow for more intrusive inspections than in the past and threaten Iraq with "serious consequences" if it obstructed them.

Speculation that a U.S.-led war on Iraq might cause disruption to Middle East oil sent prices soaring up to around $30 a barrel earlier this year.

But signs that the United States may agree to a compromise with fellow members of the UN Security Council, toning down the threat of automatic military action against Iraq if it obstructs weapons inspections, have led many speculators to unwind their positions in recent days.