By OGJ editors
HOUSTON, Sept. 26 -- Oil prices dropped by more than $1 Sept. 25, closing below $80/bbl on the New York Mercantile Exchange. Analyst said the dip stemmed from worries about the US economy.
Sales of existing homes are down to the lowest rate since August 2002, which some say indicates a slowing economy. Citing a nervous energy market, analysts said any sign of a potential economic slowdown could hurt US oil demand.
The retreat comes after front-month crude futures prices jumped to new highs above $82/bbl Sept. 18 after the Federal Reserve cut its target interest rate by a larger-than-expected half of a percentage point to 4.75%.
The Energy Information Administration reported Sept. 26 commercial US crude inventories rose by 1.8 million bbl to 320.6 million bbl the week ended Sept. 21.
US gasoline stocks grew by 600,000 bbl to 191.4 million bbl during the same week, still well below the lower end of the average range. Distillate fuel inventories increased by 1.6 million bbl to 137.1 million bbl. Propane and propylene inventories increased by 800,000 bbl to 58.9 million bbl in the same week.
During that period, imports of crude into the US increased 637,000 b/d to 10.4 million b/d. Gasoline imports averaged more than 1 million b/d. Imports of distillate fuel were at 314,000 b/d. Input of crude into US refineries decreased by 339,000 b/d to 15 million b/d. Gasoline production fell to 8.7 million b/d, but distillate fuel production rose, averaging 4.1 million b/d.
Refinery utilization dropped to 86.9% of capacity, which was more than analysts expected. They said lower capacity could reflect the temporary shutdowns of some refineries following Hurricane Humberto 2 weeks ago.
Another factor in refining capacity could be the start of seasonal refinery maintenance, analysts suggested.
The November contract for benchmark US sweet, light crudes dropped $1.42 to $79.53/bbl Sept. 25 on NYMEX. The December contract lost $1.54 to $78.61/bbl.
On the US spot market, West Texas Intermediate was down $1.03 to $81.64/bbl. Heating oil for October delivery declined 4.93¢ to $2.1813/gal on NYMEX. The October contract for reformulated blend stock for oxygenate blending fell 4.55¢ to $2.0379/gal.
The October natural gas contract edged down 1¢ to $6.36/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 36¢ to $6.50/MMbtu.
In London, the November IPE contract for North Sea Brent crude dropped $1.29 to $77.62/bbl.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes slipped by 68¢ to $75.80/bbl.