MARKET WATCH: Crude oil prices, inventories decline

Sam Fletcher
OGJ Senior Writer

HOUSTON, Dec. 30 -- The front-month crude oil contract price continued its recent seesaw pattern, down a modest 0.4% Dec. 29 in the New York market as investors face another January—“ a month which has seen increases in oil stockpiles in each of the last 4 years,” said analysts in the Houston office of Raymond James & Associates Inc.

However, the new front-month natural gas contract closed flat as forecasts for warmer weather offset expectations for larger-than-average withdrawals from commercial US inventories. “The broader [equities] market wrapped up the day only slightly higher on meager holiday trading volumes,” Raymond James analysts reported. “Low volumes and a dip in crude prices were not enough to stop the momentum behind energy stocks, which rose yet again.”

Olivier Jakob at Petromatrix, Zug, Switzerland, said, “In financial markets the main item yesterday was the meltdown of the dollar in particular to the yen or to the Swiss franc. It will not be a festive start of the New Year for the export industry and services of those two countries.”

He reported, “Futures markets continue to be dominated by a lack of trading volume and prices are therefore kept in a very narrow trading range.”

US inventories
The Energy Information Administration said Dec. 30 commercial US crude inventories continued to fall in the week ended Dec. 24 but at a slower rate, down 1.3 million bbl to 339.4 million bbl, an above-average supply for this time of year. That was less than the Wall Street consensus for a 2.9 million bbl decrease, however. Gasoline stocks dropped 2.3 million bbl to 214.9 million bbl during the same period, opposite market expectations for a 1.5 million bbl increase. Both finished gasoline and blending components declined. Distillate fuel inventories inched up 200,000 bbl to a just-above-average total of 161 million bbl, EIA reported, vs. a street consensus for a 600,000 bbl decrease.

The American Petroleum Institute earlier reported crude stocks up 3.1 million bbl to 345.1 million bbl in the week before Christmas. It said gasoline inventories dropped 3.1 million bbl to 216.4 million bbl, with distillate stocks up 1.4 million bbl to 162.6 million bbl.

Imports of crude into the US increased just 72,000 b/d to 8.8 million b/d during the same period, EIA reported. In the 4 weeks through Dec. 24, crude imports averaged 8.6 million b/d, up 663,000 b/d for the comparable 4-week period in 2009. Gasoline imports averaged 775,000 b/d in the latest week while distillate fuel imports averaged 251,000 b/d.

The input of crude into US refineries inched up just 3,000 b/d to 14.9 million b/d in the week ended Dec. 24 with units operating at 87.8% of capacity from 88% the previous week. Gasoline production decreased to 9.3 million b/d while distillate fuel production increased to 4.7 million b/d, according to EIA.

Energy prices
The February contract for benchmark US sweet, light crudes dropped 37¢ to $91.12/bbl Dec. 29 on the New York Mercantile Exchange. The March contract lost 33¢ to $91.90/bbl. Subsequent monthly contracts were all down but in contango through Dec. 2011.

On the US spot market, West Texas Intermediate at Cushing, Okla., decreased 37¢ to $91.12/bbl. The soon-to-expire January heating oil contract dipped 0.28¢ but the closing price was essentially unchanged at a rounded $2.52/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month continued its decline, down 1.52¢ to $2.39/gal.

The new front-month February contract for natural gas slipped 0.1¢ to $4.29/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., continued climbing, up 5.6¢ to $4.17/MMbtu.

In London, the February IPE contract for North Sea Brent crude decreased 24¢ to $94.14/bbl. Gas oil for January lost 25¢ to $780/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes gained 14¢ to $90.22/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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12/15/2014

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