HOUSTON, Nov. 17 -- Energy prices rebounded Nov. 16 on a government report of major declines in US stocks of crude and gasoline, undercutting previous speculation of demand destruction because of high costs to consumers.
In its Nov. 16 report, the Energy Information Administration said commercial US crude inventories plunged by 2.2 million bbl to 321.4 million bbl during the week ended Nov. 11. US gasoline stocks fell by 900,000 bbl to 200.2 million bbl in the same period. However, distillate fuel inventories gained 2.6 million bbl to 123.4 million bbl with increases in both heating oil and diesel (OGJ Online, Nov. 16, 2005).
"Gasoline consumption materially rose from [the previous] week and returned to levels last seen prior to Hurricane Katrina. We expect imports to recede from recent record highs and seasonally greater heating oil demand during the winter months to result in a strengthening of refining margins over the coming weeks," said analysts at Friedman, Billings, Ramsey & Co. Inc., Arlington, Va., in a Nov. 17 report.
Prior to EIA's Nov. 16 report, the consensus of Wall Street analysts was for a 1.6 million bbl build in gasoline inventories, a 450,000 bbl increase in distillates, and a 2 million bbl hike in crude stocks. EIA reported Nov. 17 the injection of 53 bcf of natural gas into US underground storage. That was above the Wall Street consensus and compared with an injection of 51 bcf the previous week and a withdrawal of 6 bcf during the same period in 2004. US natural gas storage is at nearly 3.3 tcf, down by 179 bcf from a year ago but 40 bcf above the 5-year average for the same time of year.
Energy prices also were supported by forecasts for much lower temperatures in the Northeast US in the coming week. "Temperatures next week will be the coldest felt on the East Coast this fall and may mark the start of a persistent cold pattern. Home-heating demand in the Northeast, where 80% of the nation's heating oil is consumed, will be 15% higher than normal through Nov. 23, according to a private forecaster," said analysts at Enerfax Daily.
The US Minerals Management Service said 149 production platforms were still without crews in the Gulf of Mexico on Nov. 16, unchanged from the previous day. Shut-in gulf crude production dipped to 725,218 b/d, while shut in natural gas production was essentially unchanged at 3.7 bcfd. The cumulative production lost from federal leases in the gulf since Aug. 26 increased to 87.1 million bbl of crude and 449.5 bcf of natural gas. That amounts to 15.9% of the crude and 12.3% of the natural gas produced annually from those waters.
The Louisiana Department of Natural Resources said Nov. 16 that onshore crude production in the southern part of the state has reached 108,703 b/d, or 53.5% of that region's capacity. Natural gas production of 1.3 bcfd, or 57.1% of capacity, has been restored in 38 southern Louisiana parishes. There are no current updates on refineries impacted by Hurricanes Rita and Katrina, said Department of Energy officials.
The average price for the December contract of benchmark US sweet, light crudes jumped by 90¢ to $57.88/bbl Nov. 16 on the New York Mercantile Exchange. The January contract escalated by 84¢ to $58.45/bbl. The US spot market price for West Texas Intermediate was not available.
Heating oil for December delivery gained 4.83¢ to $1.73/gal on NYMEX. Gasoline for the same month was up by 2.66¢ to $1.48/gal. The December natural gas contract shot up by 76.6¢ to $12.33/MMbtu. "Technically, since the market rallied above $11.98[/MMbtu], expect the contract to test highs of $12.45-12.93," said Enerfax Daily analysts.
In London, the new January front-month contract for North Sea Brent crude increased by 82¢ to $56/bbl on the International Petroleum Exchange. But gas oil for December lost $3 to $518.50/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes slipped by 28¢ to $49.73/bbl on Nov. 16.
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