Dollar Falls Against Yen; BOJ's Suda Says Bank Closer to Shift in Policy

Sept. 28 (Bloomberg) -- The dollar fell against the yen after Bank of Japan policy maker Miyako Suda said the central bank is "getting closer'' to reducing the amount of money it pumps into the economy. Suda, who spoke to executives in Koichi City in southern Japan, is the latest Japanese central banker to signal an end to the BOJ's practice of holding interest rates near zero to combat deflation. The dollar also weakened versus the euro after failing to remain stronger than $1.20 for a second straight day. "Our view is that the yen is going to strengthen,'' said Eric Darwell, a currency strategist in New York at Citigroup Inc., the world's biggest bank, "The BOJ is moving away from easing and toward using rates to influence policy. This is another step in that direction.'' Against the dollar, the yen strengthened to 113.11 at 5 p.m. in New York from 113.30 late yesterday, according to electronic foreign-exchange dealing system EBS. Japan's currency fell 1 percent yesterday, the most since June 10. The dollar weakened to $1.2035 per euro from $1.2013. Darwell said he expects the yen to rise to 108 per dollar by year-end. The dollar briefly breached $1.20 per euro in morning trading in New York, touching $1.1982, before weakening. Analysts including Dennis Gartman say $1.20 may be a barrier to the dollar advancing. It last closed stronger than $1.20 in July. "We might wish to call this `big figure fatigue,' for the dollar is holding just above the materially and very psychologically important 1.20 level,'' wrote Gartman, an economist in Suffolk, Virginia, and editor of the Gartman Letter, in a report sent to clients today. We expect "that support for the euro to be broken.''

Japan's Bonds, Stocks
Japanese bonds fell and stocks climbed, led by banks, after Suda's comments. The Nikkei 225 Stock Average and the Topix index rose to the highest in more than four years. Foreigners were net buyers of Japanese equities for a 14th straight week last week. The BOJ has kept rates near zero for more than four years to overcome deflation, which has eroded corporate profits and discouraged consumers from spending. Suda has been a member of the central bank's rate-setting board since 2001. "Suda's comments point to a shift in thinking over policy by the Bank of Japan,'' said Benedikt Germanier, a currency strategist in Zurich at UBS AG, the second-largest foreign- exchange trading bank. "This is going to trigger yen buying, especially as the yen had been oversold against the dollar.'' Toshikatsu Fukuma and Atsushi Mizuno, who also vote on rates, said at policy meetings in the past two months that the bank should cut the amount it makes available to lenders from as much as 35 trillion yen, according to minutes released Sept. 13.
Japan's currency also advanced after it approached a technical indicator that may signal a reversal of direction versus the dollar. The yen has dropped almost 10 percent this year against the U.S. currency, and reached 113.51 per dollar yesterday, the weakest since July. "We might be due for a pause near-term in the dollar's gains,'' said John Horner, a currency strategist in Sydney at Deutsche Bank AG, the world's largest currency trader, according to Euromoney magazine. The dollar's 14-day relative strength index against the yen yesterday rose to 66.1, nearing a level that signals gains may be excessive. The euro's RSI against the dollar dropped to 35.25. A level above 70 or below 30 may herald a change in direction. The index measures the momentum of a currency's movements. Reports from Japan in the next week may show the world's second-largest economy is picking up. The Bank of Japan's Tankan quarterly index of business confidence probably rose to 20 points in September from 18 points in June, according to the median of 28 forecasts in a Bloomberg News survey before a report on Oct. 3. Japan's industrial production likely increased 1.8 percent in August, compared with a 1.2 percent decline in the previous month, according to the median forecast of economists surveyed by Bloomberg News. The report is due for release on Sept. 30.

U.S. Durable Goods
Losses in the dollar may be limited after a U.S. report showed durable-goods orders increased more than economists forecast. Three Fed policy makers this week signaled growth is strong enough to allow further rate increases. Kansas City Fed Bank President Thomas Hoenig said late yesterday the economy is in "reasonably good shape.'' "It's difficult to argue against a stronger dollar,'' said Gavin Friend, a currency strategist at Commerzbank AG in London. "The Fed has clearly telegraphed it will continue raising the rate through the year.'' Orders for durable goods rose 3.3 percent last month, from a revised 5.3 percent drop the month before. Economists expected an increase of 0.7 percent, according to the median of 64 forecasts in a Bloomberg News survey. The dollar has advanced almost 13 percent against the euro this year as the Federal Reserve raises interest rates at a "measured'' pace and the European Central Bank doesn't budge. Fed policy makers on Sept. 20 lifted the benchmark interest- rate target for the 11th time in a row, to 3.75 percent. The European Central Bank has kept its benchmark rate at 2 percent since 2003.

Dollar up; Traders focus on higher rate outlook

NEW YORK, Sept 27 (Reuters) - The dollar rallied on Tuesday, hitting 2-month highs against the euro and yen, as traders focused on remarks from Federal Reserve officials that point to more interest rate increases. Analysts said one catalyst for dollar gains during the session were remarks by San Francisco Fed President Janet Yellen, who said the Federal Reserve "must deliver" on its commitment to price stability, adding that an unacceptable rise in inflation is not an option. "We are getting a consistent view from the Fed now that they are somewhat worried about the risk of a higher inflation rate. That is going to cause more rate hikes to come and higher yields will help the dollar," said Tim Mazanec, senior currency strategist with Investors Bank & Trust in Boston. Yellen's remarks overshadowed a report showing a steep fall in U.S. consumer confidence, and a speech by Federal Reserve Chairman Alan Greenspan on "economic flexibility" delivered by satellite to an economics conference in Chicago. Many traders had hoped he would bolster expectations of higher interest rates, but he failed to deliver. Instead, the dollar eased back from these 2-month highs in afternoon trading. The euro was down about 0.5 percent from late Monday at $1.2013, according to Reuters data. It had gone as low as $1.1979 Against the Japanese yen, the dollar was trading up about 1 percent at 113.27 yen. It had climbed as high as 113.50 yen. Higher U.S. interest rates support the dollar because they increase the allure of dollar-denominated deposits to foreign investors. The euro had already slipped moderately even after a weak U.S. consumer confidence report although investors were largely waiting for Yellen and Greenspan to speak. The Conference Board's September Consumer Confidence reading was 86.6, well below analysts' forecasts of 95.0, reflecting a blow to consumer confidence from hurricane damage on the U.S. Gulf Coast and spikes in energy prices. A separate report showed August U.S. new home sales were at an annualized rate of 1.237 million, below forecasts of 1.340 million. But Todd Elmer, currency strategist with Citigroup in New York, said "New home sales were not a big number for the currency market."

Later in the day investors were buoyed by Yellen but disappointed by Greenspan, analysts said. Greenspan said that asset prices "invariably" fall after long periods of big risk-taking in markets, and a flexible economy is better able to withstand the inevitable blow. He added that it was "simply not realistic" to rely on policy-makers to spot and deal with speculative bubbles. "He doesn't say anything very specific about current monetary policy," said Steven Englander, Chief North American Foreign Exchange Strategist at Barclay's Capital in New York. "In some ways for FX markets, which have got used to Fed speakers being relatively hawkish, this may be a little disappointing (for the dollar)." Against the Swiss franc, the dollar was up 0.5 percent to 1.2957 francs. Sterling was down 0.7 percent to $1.7667. The Fed raised overnight rates last week for an 11th straight time to 3.75 percent. Although the central bank said Hurricane Katrina's damaging blow to the economy would not pose a "persistent threat," it repeated that more "measured" monetary tightening was needed. Analysts said U.S. companies' repatriation of profits from Europe before the end of the July-September quarter was also helping the dollar this week. They get a much-reduced tax rate for repatriating overseas profits this year. The dollar was also supported by the growing interest rate differential between U.S. Treasuries and German Bunds, with the 10-year yield spread testing six-year highs.

Oil, Gasoline Fall After Hurricane Rita Spares Refineries

Sept. 26 (Bloomberg) -- Crude oil prices plunged to a two- week low and gasoline declined after Hurricane Rita struck only a glancing blow to Houston's oil hub. Most of the 15 refineries closed as Rita approached are beginning to start up. Rita hit the Texas-Louisiana border on Sept. 24 with winds of 120 mph after veering away from Houston and Galveston, home to 12 percent of the U.S. refining capacity. Exxon Mobil Corp. said yesterday it began delivering gasoline from its Baytown refinery, the U.S.'s largest. "The refining sector dodged a bullet,'' said David Pursell, a partner at Pickering Energy Partners in Houston. "It looks like refineries are off for weeks, not months.'' Crude oil for November delivery fell 69 cents, or 1.1 percent, to $63.50 a barrel at 10:55 a.m. on the New York Mercantile Exchange. In earlier trading prices touched $62.65, the lowest since hitting $62.55 on Sept. 12. Futures have fallen 10 percent since touching a record $70.85 on Aug. 30, the day after Hurricane Katrina made landfall. Prices are 28 percent higher than a year ago. Gasoline for October delivery fell 9.06 cents, or 4.3 percent, to $1.995 a gallon on the Nymex. Prices touched $2.92 a gallon on Aug. 31, the highest since trading began in 1984. Futures are 48 percent higher than a year ago. The Nymex and London's International Petroleum Exchange offered weekend trading yesterday because of Rita. Both exchanges incorporated yesterday's trades as part of today's session. Oil production in the Gulf, which accounts for about 30 percent of U.S. output, was completely halted because of Rita and Katrina, the U.S. Minerals Management Service said yesterday.

Chevron Corp. said its Typhoon platform in the Gulf was "severely'' damaged after Rita. The platform was severed from its mooring and is being secured, the San Ramon, California-based company said in a statement today. "The real issue is offshore production,'' Pursell said. Rita became a Category 5 hurricane on the five-tier Saffir- Simpson scale before coming ashore, with winds of more than 155 mph as it swept over oil and gas production facilities. Damage to oil production platforms such as Chevron's Typhoon shows how strong the winds and waves from Rita were, Pursell said. Texas is home to the biggest concentration of U.S. refineries, accounting for 26 percent of the nation's total capacity. Valero Energy Corp., the nation's biggest refiner, said its Houston and Texas City refineries may restore processing this week. Exxon, the world's largest publicly traded oil company, said with terminals and pipelines reopened, it has resumed delivering gasoline from its Baytown refinery. Initial assessments of the Beaumont refinery and chemical-plant operations don't show any significant damage, Exxon said. About 5 percent of U.S. refining capacity remains closed because of Katrina.Four plants are scheduled to resume output in November or December at the earliest. Gasoline and other fuel pipelines operated by Colonial Pipeline Co. and Explorer Pipeline Co. closed because of Rita. Explorer, which normally ships 10 percent of the Midwest liquid fuel supply, is "up and running at reduced rates'', said Tom Jensen, director of operations. The pipeline resumed operations from Texas to Tulsa today and expects to resume deliveries to St. Louis and Chicago tonight or early tomorrow, Jensen said. Colonial, the world's largest operator of petroleum-product pipelines, said yesterday it resumed operation at its pipelines originating in Houston and Pasadena, Texas, and would be running at 42 percent of capacity. It expected to increase that to 54 percent of capacity today and 72 percent by tomorrow, the Alpharetta, Georgia, company said in a release.

At the pump, the average U.S. retail price yesterday rose 5.2 cents to $2.80 a gallon, according to the AAA motorists' group. It reached a record $3.057 on Sept. 2, the week Katrina hit. Gasoline futures, which serve as wholesale prices, rose 17 percent last week. That increase will translate into higher pump prices, Pursell said. It's too early to know if Rita and Katrina have affected underlying demand for gasoline, he said. "Are people really driving less?'' Pursell said. Other energy companies operating in the Gulf reported little damage from Rita. Kerr-McGee Corp., Southern Union Co. and Cheniere Energy Inc. said assets were little damaged after the storm blew through the area two days ago. Kerr-McGee's major deepwater facilities in the western Gulf had no damage, the Oklahoma City-based company said today in a statement. The Neptune facility is ready to restart as soon as pipelines are ready, the company said. Southern's preliminary assessment of its Trunkline LNG asset in Lake Charles, Louisiana, shows the infrastructure is intact, the Scranton, Pennsylvania-based company said in a statement. The site will remain shut pending further inspection, Southern said. Cheniere, based in Houston, said in a statement it found ``negligible'' impact from Rita at its Sabine Pass site in west Cameron Parish, Louisiana. Brent crude for November settlement fell 39 cents to $62.05 on London's International Petroleum Exchange. It reached a record $68.89 after Katrina hit last month.

NYMEX Oil down over $1 on ACCESS

NEW YORK, Sept 25 (Reuters) - U.S. crude oil futures were trading more than a dollar lower early on Sunday in a special electronic trading session on the the New York Mercantile Exchange as the oil refinery hub in Houston escaped serious damage by Hurricane Rita.

NYMEX crude for November delivery October delivery slipped to between $63.10 and $63.15 a barrel, traders said, after ending down $2.31 to $64.19 in the regular open-outcry session on Friday. A technical glitch prevented the NYMEX feed from reaching the Reuters wire, the traders said.

In London, November Brent , also open in a special session, traded 94 cents lower at $61.50 a barrel on the International Petroleum Exchange.

G-7 watching interest rate spreads closely

WASHINGTON, Sept 23 (Reuters) - A senior U.S. Treasury official said on Friday that G7 finance ministers agreed they have to closely monitor current spreads on interest rates to ensure current economic risks were being correctly priced.At a briefing for selected reporters, the official said Group of Seven finance chiefs had noted during a Friday session that rate spreads were currently very narrow and needed to be monitored.The official declined to say whether ministers felt rates were too low to fairly recognize risks and said only that G7 participants had commented on how narrow rate spreads were."They're not saying they're too narrow. They're saying that they are narrow," the official said when asked whether the finance chiefs were worried about rate spreads."Low interest rates invite all sorts of behaviors that create their own set of dynamics that you've got to watch and interest rates that are low for a long time create all sorts of pressure in an economy that you want to watch," and discuss at G7 councils, the official said. In a statement published earlier this week, which is to be delivered on Saturday to the International Monetary Fund, Federal Reserve Vice Chairman Roger Ferguson cautioned that many financial markets might be underpricing risks they face. He said low levels of risk premiums and long-term interest rates suggested a high level of risk-taking and said there was always a possibility that inflation could pick up or that growth might falter due to high oil prices. Indeed, the U.S. Treasury official said some of the G7 members had serious concern about the potential impact on global growth if world oil prices remain at current elevated levels. One G7 participant, who was not named by the official, said three years of $66 a barrel oil could knock global GDP down by as much as 1/2 percent to 1 percent.

The G7 meets again relatively soon -- in London in December -- partly to pay tribute to Federal Reserve Chairman Alan Greenspan, who will retire on Jan. 31 after 18-1/2 years at the helm of the U.S. central bank. The officials said there was a strong desire among G7 members to show their appreciation for Greenspan's long participation in the gatherings. U.S. officials characterized China's latest move to let the yuan float more freely against major currencies other than the dollar -- announced on Friday just ahead of the G7 gathering -- as essentially a technical move rather than a substantial change in policy. They declined to say whether it will help China avoid being named a currency manipulator in a U.S. Treasury report that was scheduled to be issued by Oct. 15 but that will be delayed. At that time, U.S. Treasury Secretary John Snow will be in China, where he is scheduled to attend meetings of the Group of 20 -- a gathering that includes key emerging-market economies as well as those in the G7. China announced a small 2.1 percent revaluation in its yuan currency against the dollar on July 21, a step the G7 praised as a move toward greater currency flexibility in a communique issued on Friday. China had pegged its currency at a low fixed level to the U.S. dollar for a decade prior to that, which U.S. manufacturers said gave its exports an unfair price advantage.
The July action by China, which came in the face of rising U.S. Congressional anger about the flood of cheap Chinese-made products into U.S. markets, came after Treasury warned in a May report that China likely would be named a manipulator unless it did move toward a more flexible currency system.

Euro Falls for Week on China's Yuan Change, German Election

Sept. 24 (Bloomberg) -- The euro fell for a third week against the dollar, the longest losing streak since May, after China widened the yuan's trading band against the European currency and Germany's election failed to produce a clear winner. China's central bank said yesterday it will allow the yuan to strengthen by as much as 3 percent from a daily fixed rate against the euro, from 1.5 percent previously. It kept the range against the dollar unchanged. "It poses significant risks for the euro going forward,'' said T.J. Marta, senior currency strategist at RBC Capital Markets in New York. "It's positive for the European economy, because a strong euro has already done a lot of damage. But it's not good for the euro.'' For the week, the euro dropped 1.6 percent to $1.2042, the lowest close since July 26, at 5 p.m. yesterday in New York, according to electronic foreign-exchange dealing system EBS. The European currency also declined 0.6 percent to 135.44 yen. The 12-nation currency also weakened as the interest-rate advantage of U.S. government debt over European bonds widened this week to the most in more than five years. The change by China's central bank came the same day finance ministers from the Group of Seven industrial nations met in Washington. China may face pressure to allow its currency to appreciate further after Japanese Finance Minister Sadakazu Tanigaki said China's policy change yesterday wasn't "vital.'' "The decision is pretty technical and it's not vital to how the country will manage its entire currency system,'' Tanigaki told reporters in Washington after a meeting with U.S. Treasury Secretary John Snow. "A big issue is how China will manage the yuan, and we must watch how they will manage it.'' China may allow further revaluations in its currency this year, said Jim O'Neill, global head of economic research at Goldman Sachs Group Inc. in London. "It should serve as a reminder of the tiny progress that's been made,'' said O'Neill. "The pressure from Washington might rise after this weekend.'' A stronger yuan would boost Chinese consumers' purchasing power for imports from Asia and make the country's exports less competitive against regional rivals. The yuan has risen less than 0.3 percent since the People's Bank of China revalued the currency on July 21. The yen surged 2.3 percent that day. The decision by China came almost two years to the day after the G-7 countries called for more flexible exchange rates in a statement following their meeting in Dubai. "The timing may have been designed to head off some pressure that might be brought to bear on China,'' said Tim Fox, a currency strategist at Dresdner Kleinwort Wasserstein in London. "It's more of a refinement than any sort of indication of a policy change. The markets may interpret it as leading a way toward a change, but we'd be cautious about doing that.''

The euro was also hurt this week after Germany's national election ended in a stalemate and Italian Finance Minister Domenico Siniscalco resigned. The European currency fell the most in a week after results showed neither German opposition leader Angela Merkel's Christian Democrats nor Chancellor Gerhard Schroeder's Social Democrats won a majority in the vote on Sept. 18. Both have said they will attempt to form a coalition to lead the country. "The bigger picture is you have got major problems in Europe,'' said Alan Kabbani, a currency trader in Charlotte, North Carolina at Wachovia Corp. "The dollar's going to continue to get stronger'' versus the European currency, he said.
Merkel said differences with the Greens are too great to schedule a further round of talks on forming a government, signaling that she's pinning expectations on a "grand coalition'' with Schroeder's party. Merkel needs the support of the Greens, Schroeder's coalition partners for the past seven years, to form a government with her ally, the pro-business Free Democratic Party, after the inconclusive election. The CDU and FDP and the ruling coalition each fell short of a majority in the election, the first of 16 in Germany since World War II to fail to produce a clear winner.
The dollar had its third weekly gain against the euro as some investors set aside concerns about Hurricane Rita and higher oil prices to focus on the benefits to the U.S. currency of the Federal Reserve's "measured'' rate increases.
The U.S. currency also gained for the week versus the yen, advancing 1 percent to 112.48 yen from 111.34, its second straight weekly advance.

"Another catastrophic storm hitting the Gulf Coast is also unlikely to change their outlook and the course of interest rates,'' said Michael Woolfolk, a currency strategist in New York at Bank of New York. "The Fed feels comfortable continuing on their rate-hike trajectory. It is very supportive for the dollar.'' Hurricane Katrina struck the U.S. on Aug. 29, killing more than 1,000 people and becoming the costliest natural disaster in U.S. history. The extra yield offered by 10-year U.S. Treasuries over comparable German bunds reached 1.19 percentage points yesterday, the widest since January 2000. UBS AG raised its forecast for the dollar versus the euro and the yen after the bank's economists this week increased their year- end target for U.S. interest rates. The bank raised its year-end forecast for the Fed's key interest rate to 4.25 percent from 4 percent after the central bank lifted its overnight lending rate between banks a quarter- point to 3.75 percent on Sept. 20. UBS was one of four of the 22 firms that trade directly with the Fed that had predicted no change, the first time since May they have disagreed. "We have raised our one-month dollar targets versus the euro and yen this week in recognition of the shift in Fed views,'' the bank's currency strategists, headed by Mansoor Mohi-uddin in London, wrote in a note to clients. UBS now expects the dollar to drop to $1.24 in one month, compared with its previous forecast of $1.27. Against the yen, it forecasts the dollar will trade at 109 in one month, up from a previous prediction of 108. The Fed's rate compares with the European Central Bank's benchmark rate of 2 percent and almost zero percent in Japan. Economists forecast the Fed will raise rates to 4 percent by year-end, according to the median estimate of 56 analysts surveyed by Bloomberg News from Aug. 31 to Sept. 8. The yield on the December federal funds futures contract rose to 4.035 percent today, up 7 basis points, or 0.07 percentage point, for the week.

Oil, Gasoline Fall as IEA Releases Crude Oil and Fuel Reserves

Sept. 2 (Bloomberg) -- Crude oil and gasoline had their biggest declines since Hurricane Katrina devastated U.S. Gulf coast production facilities and as the International Energy Agency released emergency oil and fuel supplies.
The agency will make 60 million barrels available, with 30 million coming from the U.S. Strategic Petroleum Reserve, over the next 30 days, Energy Secretary Samuel Bodman said. The Louisiana Offshore Oil Port, the biggest U.S. oil-import terminal, and pipelines have opened. The U.S. relaxed clean-air rules this week in an effort to increase fuel supplies. "The U.S. and our allies are throwing everything they have at this problem,'' said John Kilduff, vice president of risk management at Fimat USA in New York. "The IEA release may result in an increase of actual barrels. The government has an open-door policy at the SPR and relaxed EPA standards may stabilize the situation.'' Crude oil for October delivery fell $1.90, or 2.7 percent, to close at $67.57 a barrel on the New York Mercantile Exchange. The contract touched a record $70.85 on Aug. 30. Oil is up 2.2 percent for the week. Gasoline for October delivery fell 22.53 cents, or 9.4 percent, to close at $2.1837 a gallon. The October contract is up 18 percent this week. Katrina's destruction caused fuel shortages in parts of the U.S. and raised concern that the economy will slow. Companies and individuals increased spending as gasoline, diesel and jet fuel prices surged. Prices may rise before the end of the year as refiners struggle to restore output. Global demand peaks in the fourth quarter as winter arrives in the Northern Hemisphere. U.S. consumers are likely to pay $3 a gallon or more for gasoline for at least "the next six to eight weeks'' because of refinery damage, Ben Bernanke, President George W. Bush's chief economic adviser, said yesterday. The agency's move is the second coordinated release in its 31-year history. The group controls 1.4 billion barrels that can be used in emergencies. The only other time the reserves have been used was during the Persian Gulf War in 1991. The use of reserves is intended "to supplement the market forces already in place,'' Bodman said at a press conference in Washington.

Strategic Oil Reserve

Exxon Mobil Corp. will receive 6 million barrels of oil from the nations' reserve to counter supply disruptions,Bodman said in a statement yesterday. Valero Energy Corp., the largest U.S. oil refiner, said the department approved a 1.5 million- barrel loan from the reserve. Placid Refining Co. LLC said the government approved its request for 1 million barrels. "It's possible that with more oil coming into the market organized by the IEA, it will push prices a lot lower,'' said Kevin Blemkin, a broker with Man Financial in London. "Gasoline is obviously where we have the main problem.'' Regular-grade gasoline, averaged nationwide, rose 16 cents to a record $2.867 a gallon yesterday, according to data released today by the AAA, the nation's largest motoring organization. Pump prices are 55 percent higher than a year ago. One-fourth of Atlanta area gasoline stations had no fuel to sell this morning, said Georgia Association of Petroleum Retailers director Tom Smith. Smith said the state's gasoline distribution pipelines were running and stations would receive allocations of fuel throughout the weekend. Panic-buying midweek because of rumors of gasoline outages contributed to the short supply, Smith said. "The massive lines at all the stations sucked the bottom of the tank out.'' The September gasoline contract in New York touched $2.92 a gallon on Aug. 31, the last day it traded and the highest since trading began in 1984. Futures are up 83 percent from a year ago. The Nymex shut at 1 p.m. instead of the normal 2:30 p.m. today and will remain closed on Sept. 5 because of the Labor Day holiday. "What we need is gasoline and the market appears to be taking care of that, as cargoes leave Europe for the U.S.,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Tilburg, the Netherlands. "When the spread is this wide the cargoes will come.'' BP Plc and Morgan Stanley are among companies planning to ship European gasoline to the U.S. As many as 10 tankers were booked this week to transport 363,000 metric tons, according to five shipbrokers yesterday.

Gasoline Standards

"The EPA just relaxed gasoline standards, making a greater volume available,'' said Kyle Cooper, an analyst with Citigroup Inc. in Houston. "Both chemically and physically it is easier to make winter-grade gasoline.'' The U.S. Environmental Protection Agency on Aug. 31 waived federal clean air standards for all 50 states, the District of Columbia and U.S. territories through at least Sept. 15 because of supply disruptions caused by Katrina. Refiners, importers, distributors and retailers will be able to sell gasoline that meets lower standards for emissions. "Some refiners didn't suffer as much damage as was first feared,'' Mueller said. "Once the repairs are done refiners have every reason to increase their runs.'' Royal Dutch Shell Plc, Europe's second-biggest oil company, said repairs are under way at the 225,000-barrel Motiva Convent refinery in Louisiana. The plant may start next week. Entergy Corp., Louisiana's largest utility, has restored electricity to a majority of the refineries that lost power after Katrina slammed into the Gulf Coast. The profit margin for turning a barrel of crude oil into gasoline and heating oil is $22.849, based on futures prices in New York. That has almost doubled from Aug. 26 and is almost four times higher than a year ago. Gasoline stockpiles in the U.S. have fallen for nine straight weeks and are at their lowest since November 2003, according to the Energy Department's weekly inventory report, which was released Aug. 31. Inventories are 4 percent lower than the five-year seasonal average, department figures show. "Next week's report will be incredibly bullish,'' Cooper said. "Hoarding is going on along the Gulf Coast and elsewhere, which will result in huge declines across the board.'' In London, the October Brent crude-oil futures contract fell $1.66, or 2.5 percent, to close at $66.06 a barrel on the International Petroleum Exchange. Prices touched $67.88, the highest since trading began in 1988. Next week, crude oil may rise above this week's record on concern damage will take months to repair, a Bloomberg survey showed. Thirty-one of 61 analysts and strategists surveyed, or 51 percent, said oil will rise next week. Eighteen, or 30 percent, said prices will decline and 12 forecast little change.