MARKET WATCH
Futures prices for oil, petroleum products continue decline

HOUSTON, Nov. 5 -- Energy futures prices continued a general decline Tuesday, based on traders' expectations of bearish reports Wednesday of increased US inventories of crude and petroleum products.

Instead, the US Energy Information Administration said early Wednesday that US oil stocks rose by a scant 100,000 bbl to 291.9 million bbl during the week ended Oct. 31, despite record high oil imports for October.

New October record
US oil imports averaged nearly 10.2 million b/d during the week ended Oct. 31, the highest weekly average ever for the month of October, EIA reported. That was up by 17,000 b/d from the previous record set the previous week (OGJ Online, Oct. 30, 2003). "Crude oil imports from West Africa were relatively high last week," said EIA in its latest report.

The 2 consecutive weeks of record high imports for the month capped an earlier decline, however. The previous 4-week average of 9.7 million b/d of US oil imports through Oct. 17 was the lowest since mid-July (OGJ Online, Oct. 23, 2003). US oil inventories remain 11.2 million bbl below the 5-year average for this time of year.

Moreover, EIA reported the first decline in US distillate stocks in recent weeks. Distillates were down by 1.3 million bbl to 132.7 million bbl during the last week of October, with the decline of heating oil more than compensating for a slight rise in diesel fuel. US gasoline inventories fell by 2.5 million bbl to 191.3 million bbl during the same period.

Crude input into US refineries averaged more than 15.5 million b/d during the week ended Oct. 31, up by 107,000 b/d from the previous week. "This is the fourth week in a row in which crude oil refinery inputs have increased, clearly signaling that some refineries are returning from their fall maintenance programs," said EIA officials.

US demand for gasoline has averaged nearly 9.2 million b/d over the last 4 weeks, up 3.9% from the same period last year. Demand for distillate fuels, however, is down by 0.4% over the same period, while US demand for kerosine-type jet fuel inched up by 0.1% from last year.

Energy prices
The December contract for benchmark US light, sweet crudes lost 15¢ to $28.75/bbl Tuesday on the New York Mercantile Exchange, while the January position retreated by 11¢ to $28.63/bbl. On the cash spot market, West Texas Intermediate crude at Cushing, Okla., declined by 15¢ to $28.78/bbl.

Heating oil for December delivery fell by 0.69¢ to 77.86¢/gal on NYMEX. Unleaded gasoline for the same month was down by 0.32¢ to 78.4¢/gal.

However, the December natural gas contract regained 2.2¢ to $4.73/Mcf on NYMEX, "lifted by colder late-week weather forecasts and some technical buying" after the previous "downside momentum stalled" at the Tuesday opening of that market, said analysts Wednesday at Enerfax Daily.

In London, the December contract for North Sea Brent oil lost 20¢ to $27.16/bbl Tuesday on the International Petroleum Exchange. The November gas oil contract lost $4 to $246.25/tonne. However, the December natural gas contract gained 13.9¢ to the equivalent of $5.79/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes declined by 42¢ to $26.77/bbl Tuesday.

Contact Sam Fletcher at samf@ogjonline.com

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