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Oil Futures Pass $60

Chuck Marvin

Energy prices rose Wednesday as problems at North American refineries affected the supply of refined products and as the deadline for Iran to abide by a U.N. resolution to halt its nuclear research loomed.

The April contract for light, sweet crude ended the trading day up $1.23 to $60.07 a barrel at the New York Mercantile Exchange. The March contract has expired.

The April contract for natural gas finished up 3 cents at $7.65 per million British thermal units. Heating oil added 2 cents to close at $1.68 a gallon, and gasoline gained 3 cents, finishing at $1.70 a gallon.

Refinery outages are generating some concern over the energy sector's ability to change its focus from winter heating oil to refined products such as gasoline, according to Tom Bentz, energy analyst at BNP Paribas Commodity Futures in New York.

A fire shut in Valero's (VLO Quote) McKee refinery in Sunray, Texas, on Friday. Valero now says it won't attempt a restart for several weeks. The refinery produces roughly 160,000 barrels a day, 54,000 barrels of which are refined products.

Last week, a fire also struck Imperial Oil's (IMO Quote) Nanticoke refinery in Canada, causing a gasoline shortage in the Ontario region.

Regardless of the refinery issues, the current inventories of gasoline and other refined products in the U.S. are "comfortable," according to Bentz.

Geopolitical tensions around the globe are also keeping energy prices somewhat elevated. Iranian President Mahmoud Ahmadinejad promised Wednesday to continue to pursue uranium enrichment regardless of the possibility of a reaction by the international community. Today is the deadline for Iran to demonstrate to the U.N. that it's acting upon its resolution calling for a stoppage.

"Tensions between the West and Iran, ongoing Nigerian strife, (expected to spike as we approach the April elections), and frequent refinery outages, are all lending support to prices," wrote Edward Meir, energy analyst at Man Energy, in a research report.

At the same time, springlike temperatures covering much of the U.S. are preventing energy commodities from moving higher. "Capping the upside, however, is the warmer weather spell now setting onto large regions of the U.S.," Meir wrote. "This seems to be a recipe that calls for more sideways trading."

Because of the federal holiday in the U.S. on Monday, crude oil inventory figures will be released by the Energy Information Administration along with natural gas inventory figures on Thursday.

Energy stocks were mostly higher on the day. The iPath Goldman Sachs Crude Oil(OIL Quote) ETF was 28 cents higher at $35.74.

Trans Canada(TRP Quote), a Canadian natural gas provider, announced that it intends to purchase 8.7 million common units of TC Pipelines(TCLP Quote) for $34.57 a unit. TC Pipelines rose 3.4% to close at $37.36.

Dawson Geophysical(DWSN Quote), which provides onshore seismic data used in energy exploration, was upgraded by Matrix Research from a buy to a strong buy. Its stock rose 4.7% to $42.42.

Energy and production firm Progress Energy (PGN Quote) was upgraded by J.P. Morgan from underweight to neutral. The company's stock climbed 29 cents to $50.30.

E&P firm GMX Resources (GMXR Quote) was downgraded by A.G. Edwards, sending its stock down 3.3% to $34.35.