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MARKET WATCH: Brent, gas prices rise; WTI remains flat

Oil prices made generally small gains in primarily aimless markets June 26 despite a 2% increase for North Sea Brent on the possibility of supply disruptions in Norway and Iran. The price for West Texas Intermediate was essentially flat, but natural gas continued to trend up, rising 2.7% in New York.

“While confidence in the Euro-zone is as low as ever, the broader [equity] market and energy stocks modestly rebound from the June 25 sell-off as better-than-expected data showed the decline in US home prices continuing to decelerate,” said analysts in the Houston office of Raymond James & Associates Inc. “However, other economic readings such as the consumer confidence and manufacturing continue to imply a slowdown.” The SIG Oil Exploration & Production Index and Oil Service Index posted modest gains of 1.2% and 0.5%, respectively, led by the price gain for Brent.

Equity and commodity prices climbed in early trading June 27, however, after the National Association of Realtors reported purchases of used homes increased at the fastest pace in 2 years, indicating improvement in the housing market in some areas.

The US government also reported orders for long-lasting manufactured goods rose 1.1% in May, giving equity and commodity markets an additional boost.

US inventories

The Energy Information Administration said June 27 commercial US crude inventories declined 100,000 bbl to 387.2 million bbl in the week ended June 22, far short of the Wall Street consensus for a 1.3 million bbl draw. US crude stocks are still above average for this time of year, however. Gasoline inventories increased 2.1 million bbl to 204.8 million bbl last week, exceeding analysts’ expectations of a 1 million bbl advance. Both finished gasoline and blending components were up for the week. Distillate fuel stocks fell 2.3 million bbl to 118.9 million bbl, below average for this date and opposite market anticipation of a 1.2 million bbl gain.

The American Petroleum Institute earlier reported US crude inventories rose 507,000 bbl to 385.7 million bbl in the week ended June 22. Gasoline stocks were up 373,000 bbl to 205.3 million bbl, while distillate fuel fell 1 million bbl to 119.8 million bbl, API said.

EIA said imports of crude into the US dropped 327,000 b/d to 9.1 million b/d last week. In the 4 weeks through June 22, US crude imports averaged 9.2 million b/d, an increase of 343,000 b/d from the comparable period in 2011. Gasoline imports last week averaged 773,000 b/d while distillate fuel imports averaged 90,000 b/d.

Input of crude into US refineries last week increased by 37,000 b/d to 15.6 million b/d with units operating at 92.6% of capacity. Gasoline production increased to 9.3 million b/d; distillate fuel production decreased to 4.5 million b/d.

Energy prices

The August and September contracts for benchmark US light, sweet crudes increased 15¢ each to $79.36/bbl and $79.77/bbl, respectively, June 26 on the New York Mercantile Exchange. On the US spot market, WTI at Cushing, Okla., also was up 15¢ to $79.36 in lock-step with the front-month crude futures contract.

Heating oil for July delivery advanced 3.8¢ to $2.58/gal on NYMEX. Reformulated stock for oxygenate blending for the same month slipped 0.07¢ but closed essentially unchanged at a rounded $2.65/gal.

The July natural gas contract maintained its rally, up 7.3¢ to $2.77/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., dipped 0.6¢ to $2.70/MMbtu.

In London, the August IPE contract for North Sea Brent climbed $2.01 to $93.02/bbl. Gas oil for July regained $10.75 to $818.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased $1.21 to $90.13/bbl.

Contact Sam Fletcher at samf@ogjonline.com.


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