Union says talks to end U.S. refinery strike 'moving along'

By Erwin Seba HOUSTON (Reuters) - The union representing striking U.S. refinery workers said on Tuesday that renewed talks with oil companies for a settlement to the 38-day work stoppage were "moving along." A meeting in Houston between negotiators for the United Steelworkers union (USW) and Shell Oil Co, representing U.S. refinery owners, ran into Tuesday night. While the USW's message about progress in the talks began on a positive note, it also carried a threat. "Bargaining is moving along," the message reads. "Industry needs to close the gaps and end the strike or see it expand." A spokesman for Shell, which is the U.S. arm of Royal Dutch Shell Plc, declined to comment on the union's message. "As always, we remain committed to reaching a mutually satisfactory agreement," said Shell spokesman Cameron Yost. Since the strike began on Feb. 1, it has spread to 15 plants, including 12 refineries accounting for one-fifth of U.S. crude oil refining capacity. Analyst group Fitch Ratings warned on Tuesday that an extended strike could squeeze refiners with walkouts during peak summer demand for gasoline. "A prolonged strike could tighten up supply balances -particularly gasoline - as the United States heads into its peak driving season," Fitch said in a statement. Tighter gasoline supply could translate into higher retail prices for drivers, but lower profits for those refiners who cannot maintain production with temporary replacement workers. So far, refiners have kept their plants running with a mix of managers and engineers. Fitch said reductions in refinery production due to the strike could hit hardest those companies with the most plants affected, including Shell. "The percentage of refining capacity by company that is covered by a USW contract ranges from high levels - Motiva, 100 percent and Tesoro, 77 percent ..." Fitch said. Workers are striking at all three of Motiva Enterprises' [MOTIV.UL] refineries, including the nation's largest, and three of Tesoro Corp's plants. Motiva is co-owned by Shell, which also has strikes at a Houston-area refinery and two chemical plants. In a new three-year pact, the USW has said it wants to preserve past safety protections and regain jobs lost to non-union contractors. Shell and other refiners have said they want to preserve management rights to staff plants as they see fit. (Reporting by Erwin Seba; Editing by Lisa Shumaker)