Updated from 12:19 p.m. EDT
Oil prices climbed Friday as refinery fires in the U.S. triggered buying.
Crude for September delivery closed up 67 cents to $60.57 on Nymex. Gasoline futures rose 2 cents to $1.74 a gallon.
A fire at a residual hydro treating unit at
refinery in Texas that broke out earlier and is now reportedly under control infused anxiety into the market. The fire probably did not disrupt production at the plant.
Another fire at
Louisiana facility on Thursday forced the shutdown of an 18,000 barrel-a-day kerosene hydrotreater, according to
. Again, production was expected to be unaffected.
The incidents follow Thursday's deadly rig fire off the shore of India, which destroyed a 110,000-barrel-a-day facility and killed as many as 12 workers.
Incidents like these can remind traders how vulnerable the market is to supply disruptions, however small, and exacerbate concerns over tight refining capacity.
"A refinery fire always gives the market a boost," says Bill O'Grady, director of market analysis at A.G. Edwards. "Although the fire raised concerns today, we have had pretty strong week with nothing significant to support it."
O'Grady says that $61.50 is the next crucial support level, which, if not penetrated within the next couple of trading sessions, will force prices back into a range of $57 to $61 a barrel, or even lower.
Still, what has been supporting oil prices all along has been a lack of excess production capacity. "With the two primary oil-consuming nations doing not bad, and no signs that the global economy is slowing, prices seem poised to continue to climb as long as there is no supply expansion," O'Grady says.
The Senate approved the Energy Policy Act of 2005 Friday, a bill that provides energy producers with $14.5 billion in tax relief, and mandates the expanded use of corn-based ethanol in gasoline.
The final version of the legislation provides royalty relief to oil and gas companies that drill in U.S. territorial deep waters, and to companies that expand their exploration and production activities in the U.S. Domestic clean coal producers and nuclear plants will also enjoy part of the $9 billion that is dedicated to traditional energy companies, while the remaining $5.5 billion will be granted to renewable and alternative energy producers.
The bill now goes to President Bush, who is expected to sign it.
Among energy companies, second-quarter earnings continue to rise across the board, fueled by high commodity prices.
reported earnings of $3.7 billion, or $1.76 a share, for the second quarter, compared with $4.1 billion, or $1.94 a share, last year. Revenue was up 26% at the No. 2 U.S. oil major, totaling $48.3 billion.
reported Friday that second-quarter results were 33% higher, driven by strong commodity prices and by debt reduction and interest payments. Net income rose to $506 million, or $2.12 a share, on revenue of $1.59 billion, slightly missing analysts' expectations.
The last the "Big Three" oil service company,
, reported Friday that net income for the second quarter surged 87% due to strong demand for its products. Earnings of $218.8 million, or 64 cents share, beat analysts' expectations.
Revenue for the second quarter of 2005 was $1,775.5 million, compared with $1,499 million for the second quarter of 2004.
"Strong activity levels in North America, Latin America, the U.K. and the Middle East are rapidly consuming excess capacity ... supporting a premium for reliable technology that delivers measurable improvements in productivity," the company said in a statement. "During the second quarter we achieved improvements in price and productivity, and did a good job of managing increasing raw materials costs. In addition, our tax rate was lower than planned."
Baker Hughes said revenue for all of 2005 are expected to increase 17% to 19% from last year, and third-quarter earnings will grow by 1% to 3% sequentially. It also provided earnings guidance of $2.52 to $2.60 a share for the full year, and 64 cents to 67 cents a share for the third quarter.
The consensus estimates compiled by Thomson Financial are $2.30 a share for the year and 58 cents a share for the next quarter. Despite the results, shares dropped 0.3% to $57.16.