March 24 (Bloomberg) -- Gasoline futures surged to a record and crude oil rose after an explosion at BP Plc's Texas City refinery, the third-largest in the U.S., raised concern about supplies before more drivers take to the road for vacation.

At least 14 people died and more than 70 were injured by the blast, BP refinery manager Don Parus told reporters in Texas City, Texas, yesterday. The plant can process 460,000 barrels of oil a day, supplying about 3 percent of U.S. fuel needs. Retail prices for U.S. gasoline also rose to a record this week.

``We know that prices will automatically react to any supply disruption because the entire oil-supply chain is working on a just-in-time basis,'' said Frederic Lasserre, the head of commodities research at Societe Generale SA in Paris. ``We have very low coverage in terms of stockpiles and this has stopped the selling wave.''

Gasoline for April delivery surged as much as 2.1 cents, or 3.3 percent, to $1.6080 a gallon on the New York Mercantile Exchange and was up 1.76 cents at $1.5925 a gallon at 10:32 a.m. London time. Crude for May delivery was up 22 cents at $54.03 a barrel after jumping as much as 1.3 percent to $54.51.

Crude fell $2.22 a barrel yesterday, or 4 percent, its biggest one-day drop this year after the U.S. government said crude supplies soared to their highest since July 2002. In the past week, prices have declined 6.3 percent from a record $57.60 on March 17. They have still gained 46 percent in the past year.

Fourth Incident

Yesterday's refinery explosion at 1:20 p.m. local time occurred in a unit that makes components that boost octane in gasoline. BP Chief Executive John Browne will travel to Texas today to meet employees and families affected by the blast. The incident was at least the fourth in the past year at the Texas City plant that caused injuries or a partial plant shutdown.

The days of demand that can be satisfied with U.S. gasoline stockpiles has steadily dropped in the past two years, according to the Energy Department. Surging motor-fuel consumption damps the effect on prices of high inventory levels.

The average weekly retail price of gasoline in the U.S. jumped to a record high of $2.11 a gallon as of March 21, the Department said in a report yesterday. Record prices may hurt the economy as consumers earmark a greater part of their income for transport.

``It's a big deal, as we're heading into the gasoline season,'' said Anthony Nunan, manager of the international oil- trading business at Mitsubishi Corp. in Tokyo. Gasoline ``is leading the oil complex right now, even though inventories are high.''

Driving Season

Refiners attempt to accumulate gasoline for the so-called driving season, which lasts for about three months in the U.S., running from the Memorial Day holiday in late May to the Labor Day holiday in early September. U.S. stockpiles last week dropped almost three times as much as expected, by 4.1 million barrels.

The refinery is London-based BP's largest, stretching over 1,200 acres and employing about 1,800 workers. It produces about 30 percent of BP's fuel supply in North America, according to the company's Web site.

``The damage at the refinery seems to be confined to one unit,'' said Andrew Bell, a London-based European equity strategist at Carr Sheppards Crosthwaite, which oversees the equivalent of $11.9 billion, including BP stock. ``The next likely move for the oil price will be downward.''

Prices have fallen more than $3 from last week's record amid signs that higher U.S. interest rates will slow economic growth and fuel consumption. The Federal Reserve raised the benchmark interest rate on March 22 for the seventh time since June, saying inflation pressures have picked up. Prices paid by U.S. consumers rose 0.4 percent in February.

``People have been shaken by what the Fed has done to keep inflation in check,'' said Robert Montefusco, a broker at Sucden (U.K.) Ltd. ``Demand for oil is still out there and the Fed is trying to ease it. If we had this explosion two weeks ago, we would've surely gone to $60'' a barrel, but the Fed has prompted funds to get out.''

Speculative long positions of crude oil on Nymex, or bets that prices will rise, were at their highest since May the week ended March 8, falling for the first week in five last week, according to the Commodity Futures Trading Commission.

Gasoline supplied, a demand indicator, fell to 9.1 million barrels a day for the week ended March 18, according to government figures. U.S. refineries operated at 90.2 percent capacity last week, the Energy Department said yesterday, as they perform seasonal maintenance.

To contact the reporter on this story: Alejandro Barbajosa in London at abarbajosa@bloomberg.net.

Last Updated: March 24, 2005 05:38 EST