HOUSTON, Feb. 17 -- Energy futures rebounded Feb. 16 amid speculation that the drop in energy prices in recent weeks may encourage members of the Organization of Petroleum Exporting Countries to reduce crude production when ministers meet Mar. 8 in Vienna to review market conditions.
Venezuelan Oil Minister Rafael Ramirez called for a cut of 500,000-1 million b/d in OPEC's output. The group's current oil production quota of 28 million b/d was adopted last June for the 10 affected members. Iraq is not included in the quota since it's still struggling to regain its prewar production levels.
Meanwhile, US imports of crude and petroleum products are at the highest level ever for February. The US Energy Information Administration reported total imports in the week ended Feb. 10 were 14.3 million b/d, up by 2 million b/d from year-ago levels. Imports supplied more than 68% of US daily oil demand, 10% higher than a year ago.
Paul Horsnell of Barclays Capital Inc., London, noted "the unprecedented pace of the crushing of gasoline cracks" [price differences between gasoline and crude futures] in recent weeks. As a result, Horsnell said, "The March gasoline crack has been sent into negative territory, having fallen by more than $5/bbl over the past week and by more than $10/bbl over the past 2 weeks." He said, "With the cracks falling away so sharply, the profitability of many refining operations has fallen below the opportunity cost of capital."
More US refining capacity is expected to fall idle as a result, triggering a drawdown of gasoline inventories.
The March contract for benchmark US light, sweet crudes bumped up by 81¢ to $58.46/bbl on the New York Mercantile Exchange Feb. 16. The April contract gained 88¢ to $60.13/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by 81¢ to $58.47/bbl. Gasoline for March delivery escalated by 2.76¢ to $1.41/gal Feb. 16 on NYMEX. Heating oil for the same month increased by 1.78¢ to $1.63/gal.
The March natural gas contract gained 6.8¢ to $7.13/MMbtu after falling for more than a week to a 7-month low.
In London, the April contract for North Sea Brent crude was up by 64¢ to $58.79/bbl on the International Petroleum Exchange. But gas oil for March lost $2.75 to $516/tonne.
The average price for OPEC's basket of 11 benchmark crudes lost 83¢ to $53.62/bbl on Feb. 16.
Contact Sam Fletcher at firstname.lastname@example.org.