Oil prices failed to get much of a bounce from progress on the fiscal cliff or the Japanese election results, both of which you would assume would be a bit bullish. In Japan the liberal Democrat Party won in a landslide on a promise of aggressive monetary easing. Here in the U.S., House Speaker John Boehner offered to raise income tax rates on households earning more than $1 million a year, a sign that at least one side was getting ready to give a bit to avoid going over the cliff. Yet with the approaching holiday and the lack of market commitment, oil will continue to stay range bound with an upward bias.
Gas prices continue to fall and may hit the lowest level of the year yet in the Midwest, drama continues at the BP refinery. Bloomberg News reported that BP Plc has delayed, until at least June, the conversion of the biggest crude unit at its Whiting, Indiana refinery to process heavy crude oil, a person familiar with operations said. Work on the 225,000-barrel-a-day unit, known as Pipestill 12, has been extended because of unexpected issues, including faulty fireproof coating on structural steel and engineering difficulties, said the person, who asked not to be identified because the information isn’t public.
Now it is being reported that BP Plc sued five contractors and suppliers, claiming the fireproof coating on structural steel used on a multibillion-dollar construction project at its Whiting, Indiana refinery is degrading prematurely. BP, in a complaint filed Dec. 3 in federal court in Hammond, Indiana, accuses the companies of breach of contract, breach of warranties and negligence. The companies named in the lawsuit are Carboline Co., Trinity Steel Fabricators Inc., Schuff Steel Co., Tecon Services Inc. and Alfred Miller Contracting Co. BP said in the complaint that it’s fixing damage caused by the defective material, known as Pyrocrete 241. “BP will have to continue to remediate the defective conditions and property damage at great cost to BP,” BP said in the complaint.
In other markets, Bloomberg reported that soybeans advanced above $15 for the first time in more than five weeks after crushing in the U.S., last year’s biggest shipper, increased in November to the highest level since 2010, adding to signs of stronger demand. They said that crushers in the U.S. used 157.3 million bushels last month to make animal feed and cooking oil, the largest amount since January 2010, data from the National Oilseed Processors Association tracked by Bloomberg showed. U.S. exporters sold 1.319 million tons in the week ended Dec. 6, the most soybeans since November 2010, according to government data.