HOUSTON, Mar. 28 -- Energy futures prices slipped Mar. 27 in the New York market with historically high levels of crude in storage offsetting strong demand and uncertainty over possible disruptions of production.
Recent claims that US inventories of crude are at the highest level since 1999 are misleading, said analysts at Petromatrix GMBH in Zug, Switzerland. That's because US crude production is today lower by 1 million b/d than it was in 1999, while US refining capacity is 1.2 million b/d greater, they said in a Mar. 14 report.
"Having to run on imports rather than the continuous flow of local produced crude oil requires higher stocks for logistics. Counting the import cushion at 20 days, the refineries would need today 20 million bbl more crude oil stocks than in 1999 to replace the lost local crude oil production," they said.
The additional refining capacity also requires more crude inventory to provide a comparable cushion of 24 million bbl of additional crude than in 1999. "Hence, instead of being in the same comfort zone as in 1999, the US would be between 40-50 million bbl lower," the analysts said. That, they said, justifies "the higher flat price and the higher premium given to disruption factors."
Meanwhile, Nigerian President Olusegun Obasanjo has called an Apr. 5 meeting with militants and other groups in the Niger Delta in hopes of restoring crude production from that area. Some 630,000 b/d, or 26% of Nigeria's normal crude production, has been shut in following sabotage of oil industry facilities and kidnappings of personnel in that area. That includes 455,000 b/d shut in by Royal Dutch Shell PLC, which has said it will not resume production until that region is pacified.
The May contract for benchmark US sweet, light crudes dipped by 10¢ to $64.16/bbl Mar. 27 on the New York Mercantile Exchange. The June contract slipped by 5¢ to $65.15/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., increased by 21¢ to $64.17/bbl. Heating oil for April delivery on NYMEX declined by 1.13¢ to $1.78/gal. Gasoline for the same month was down by 0.56¢ to $1.83/gal.
The April natural gas contract fell 22.3¢ to $7.07/MMbtu, its second consecutive loss as mild weather reduced demand for gas across much of the nation, said analysts at Enerfax Daily.
In London, however, the May IPE contract for North Sea Brent crude gained 10¢ to $63.61/bbl. The April gas oil contract lost $4 to $558.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes slipped by 3¢ to $58.02/bbl on Mar. 27.
Contact Sam Fletcher at firstname.lastname@example.org.