MARKET WATCH
Low gasoline build buoys energy prices

Sam Fletcher
Senior Writer

HOUSTON, June 22 -- Energy prices rebounded June 21 with a government report of a smaller-than-expected build in US gasoline inventories and diminishing hopes for a peaceful settlement with Iran over its uranium enrichment program.

Iranian President Mahmoud Ahmadinejad said his government would respond by mid-August to incentives offered June 6 by the five permanent members of the United Nations Security Council—China, France, Russia, the UK, and the US—along with Germany. Those countries want Iran to postpone its uranium enrichment program, pending inspections to ensure that it is not part of a plan to manufacture nuclear weapons.

US President George W. Bush expressed impatience that Iran wants to take so long to respond to what he described as a "reasonable deal."

Gasoline stocks
The US Energy Information Administration said US gasoline stocks inched up by 300,000 bbl to 213.4 million bbl during the week ended June 16, primarily because of growing demand and reduced imports of gasoline stocks and blends.

Commercial inventories of US crude increased by 1.4 million bbl to 347.1 million bbl in the same period. Distillate fuel inventories rose by 1.7 million bbl to 124.5 million bbl (OGJ Online, June 21, 2006).

"The seasonal stock build appears to be coming to end," said Paul Horsnell with Barclays Capital Inc., London. US gasoline demand for June so far is averaging "a very robust 9.429 million b/d," up from year-ago levels and "still very close" to the 9.54 million b/d record set last August, he said.

However, Olivier Jakob, managing director, Petromatrix GMBH in Zug, Switzerland, said the recent change in gasoline specifications makes it "a bit more difficult" to read gasoline demand numbers reported weekly by EIA. "We have seen recently some very high imports of gasoline and blending components in the [US] Northeast. If there is any misreporting of the stock number because the importers are not sure about the classification of the blending component, the high imports and relative low stock number make for an over-estimation of the calculated demand," he said.

Jakob agreed with EIA that US gasoline demand is still increasing, albeit at a lower-than-normal rate. "The latest data from the US Department of Transportation would also point to a growth in travel, which is only moderate," he said.

"Despite near-record-high retail gasoline prices, over the past 4 weeks, US gasoline consumption has averaged 0.9% above comparable prior-year levels, above last week's 0.6% gain," said Jacques Rousseau, senior energy analyst at Friedman, Billings, Ramsey Group Inc., Arlington, Va. "The Department of Energy projects that US gasoline prices will average $2.61/gal during the second half of 2006 and miles driven will accelerate to above the 1% growth level."

Energy prices
The new front-month August contract for benchmark US sweet, light crudes gained 99¢ to $70.33/bbl June 21 on the New York Mercantile Exchange. The September contact was up by $1.02 to $71.03/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., jumped by $1.76 to $70.70/bbl. Gasoline for July delivery escalated by 6.04¢ to $2.07/gal on NYMEX. Heating oil for the same month increased by 2.97¢ to $1.94/gal.

The July natural gas contract gained 8.6¢ to $6.59/MMbtu June 21. On June 22, EIA reported the injection of 79 bcf of gas into US underground storage in the week ended June 16. That was within the consensus of Wall Street analysts, up from an injection of 77 bcf the previous week, but down from the revised injection of 80 bcf in the same period last year. US gas storage now approaches 2.5 tcf, 451 bcf above year-ago levels and 643 bcf above the 5-year average.

Just prior to the latest EIA report, analysts at the Houston office of Raymond James & Associates Inc. said, "Eight out of the last 10 weeks have produced [natural gas] injection numbers more bullish than the Street was expecting as price-induced fuel-switching has clearly reentered the market given the lower gas prices."

In London, the August IPE contract for North Sea Brent crude increased by $1.09 to $69.17/bbl. However, the July gas oil contract slipped by 75¢ to $612.75/tonne.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

Quicksilver Canada gets LNG export approval

07/02/2015 Quicksilver Resources Canada Inc. has received approval from the National Energy Board of Canada to export 20 million tonnes/year of LNG from a pos...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Origin lets contract for Otway basin fields

07/02/2015 Origin Energy Ltd., Sydney, has let a $1.3 million (Aus.) contract to Wood Group Kenny for provision of a detailed engineering design for the onsho...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...
White Papers

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

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts

On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


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