Energy prices fall with bearish inventory reports

Sam Fletcher
Senior Writer

HOUSTON, Feb. 5 -- Energy prices tumbled Wednesday with government and industry reports of bigger-than-expected increases in US crude inventories.

Traders earlier were expecting a bearish build of 500,000-1 million bbl in US crude stocks for the week ended Jan. 30 (OGJ Online, Feb. 4, 2004).

EIA reports jump
However, the US Energy Information Administration said Wednesday that commercial oil stocks jumped by 7.9 million bbl to 271.6 million bbl in that period. Even so, it said, US crude stocks remained 28.9 million bbl below the 5-year average for that time of year.

US distillate stocks fell by 6.8 million bbl to 124.2 million bbl during the same weekly period, with large decreases in both diesel fuel and heating oil. Gasoline inventories declined by 400,000 bbl to 205.6 million bbl, down by 9.5 million bbl below the 5-year average, said EIA officials.

The American Petroleum Institute's report Wednesday on US inventories for the week ended Jan. 30 was more conservative, citing a jump of 6.3 million bbl to 274.5 million bbl of crude. US distillate stocks fell by 4.8 million bbl to 128.8 million bbl, API said, while gasoline inventories increased by 3.7 million bbl to 205.2 million bbl.

EIA cited "a big increase in [crude] imports and a decline in refinery inputs." US imports of crude increased by almost 1.9 million b/d to nearly 10.5 million b/d during the week ended Jan. 30—"the fourth largest weekly average since at least 1990," EIA officials said.

During the same period, crude inputs into US refineries were down by 202,000 b/d to 14.5 million b/d. "Most notable was that crude oil refinery inputs into the Gulf Coast averaged below 7 million b/d for the first time since the week ended Feb. 28, 2003," EIA said.

Demand remains high
However, Paul Horsnell, head of energy research, Barclays Capital Inc., London, noted that US demand for gasoline "is running higher, and imports are running considerably lower," compared with a year ago. "With maintenance having taken 5% off the level of refinery utilization over the past month, there is not a lot of room for maneuver within the system," he said. "Last year there were two major gasoline price spikes, and the odds of another this year seem to be growing."

Meanwhile, he said, "The heating oil market is now in the middle of the normal period of fastest inventory draw down." Horsnell said, "The rate of draw down has been faster than normal and is keeping pace with what was the coldest part of the US winter last year. Indeed, in the key Central Atlantic states, the draw down has been even faster than a year ago."

As a result, he said, "The heating oil market might have relaxed a little too early, running some risk of a repeat of last year's late season surprise."

Energy prices
The March contract for benchmark US sweet, light crudes dropped by $1 to $33.10/bbl Wednesday on the New York Mercantile Exchange, while the April position lost 83¢ $31.99/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., also lost $1, down to $33.13/bbl Wednesday.

Heating oil for March delivery plunged by 2.45¢ to 88.97¢/gal on NYMEX. Gasoline for the same month lost 1.58¢ to 98.57¢/gal Wednesday.

However, the March natural gas contract inched up by 0.03¢ to $5.65/Mcf on NYMEX, "as early buying on a stronger [spot]cash market and colder forecasts for next week were offset by technical selling at resistance," reported analysts Thursday on Enerfax Daily. "Technical selling kicked in early when the natural gas market stalled at resistance at this week's high of $5.79[/Mcf], but activity was light with most traders waiting for [the latest gas] storage report."

Early Thursday, EIA reported 236 bcf of natural gas were withdrawn from US underground storage during the week ended Jan. 30. That was the fifth largest weekly withdrawal of gas on record, said Robert S. Morris at Banc of America Securities LLC, New York.

It left 1.8 tcf of natural gas in storage, 306 bcf more than a year ago and 60 bcf above the 5-year average for this time of year, said EIA officials.

In London, the March contact for North Sea Brent crude lost 62¢ to $28.88/bbl Wednesday on the International Petroleum Exchange. Gas oil for February delivery lost $8.75 to $251.75/tonne. However, the March natural gas contract gained 3.2¢ to $3.98/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' declined by 64¢ to $28.55/bbl Friday, still above the group's price target of $22-28/bbl. However, the 10 active OPEC members, minus Iraq, are 90% likely to continue their present production quota of 24.5 million b/d at their Feb. 10 meeting in Algeria, said Tyler Dann, an analyst in the Houston office of Banc of America Securities.

Contact Sam Fletcher at

Related Articles

Inhofe, Lankford say new BIA rules threaten Osage oil operations

07/10/2015 New US Bureau of Indian Affairs regulations that increase production expenses on tribal lands could put the Osage Nation out of business, Oklahoma’...

House panel’s crude export ban hearing weighs urgency against caution

07/10/2015 A US House Energy and Commerce subcommittee hearing on legislation to repeal the ban on exporting US-produced crude oil quickly broke along party l...

Chevron Phillips Chemical makes executive appointments


Chevron Phillips Chemical Co. LLC has made several executive appointments, all effective Aug. 1.

Twelve workers killed in Nigeria pipeline explosion

07/10/2015 Eni SPA reported that an explosion occurred July 9 at the repair site for the Tebidaba-Clough Creek oil pipeline in Nigeria’s onshore Niger Delta.

Gov. Tomblin forms West Virginia oil, gas safety commission

07/10/2015 West Virginia Gov. Earl Ray Tomblin (D) established the oil and gas safety commission he announced in his 2015 State of the State address. The grou...

MARKET WATCH: NYMEX, Brent crude oil prices rebound more than $1/bbl

07/10/2015 Prices for US light, sweet crude oil and Brent crude each rebounded by more than $1/bbl on their respective markets July 9, and analysts attributed...

Lukoil taps new blending technology for Russian refinery

07/09/2015 OAO Lukoil has selected Honeywell Process Solutions (HPS), a division of Honeywell International Inc., to provide process control technology design...

Transco seeks FERC approval for New York Bay Expansion project

07/09/2015 Transcontinental Gas Pipe Line Co. LLC (Transco), a wholly owned subsidiary of Williams Partners LP, has filed an application with the US Federal E...

House Oversight panel subpoenas Kerry for Keystone XL documents

07/09/2015 The US House Oversight and Government Reform Committee issued a subpoena to US Sec. of State John F. Kerry for reports, recommendations, letters, a...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts

Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected