MARKET WATCH: Crude oil price up slightly; gas continues to climb

The front-month crude oil contract regained a modest 0.5% while natural gas continued climbing, up 1.9% July 24 in the New York Mercantile Exchange as commodity traders generally ignored dismal economic indicators.

In the equity market, however, weak corporate earnings, a pullback at US factories, and renewed worries about Spain’s economy triggered the third consecutive triple-digit point loss in the Dow Jones Industrial Average—a series of downturns that “last happened almost a year ago,” said analysts in the Houston office of Raymond James & Associates Inc. “Overall, New York Stock Exchange losers led gainers three to one.” The SIG Oil Exploration & Production Index and the Oil Service Index were hit hard, dropping 2.8% and 1.6%, respectively.

“Today [during early trading] the gains in crude oil prices have been largely a dollar play, as easing Euro-zone concerns and improved sentiment (as evident in positive European equity markets) have taken downward pressure off the euro,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. However, the weekly US oil inventory report “could derail the upward momentum,” he warned.

US inventories

The Energy Information Administration reported July 25 commercial US crude inventories increased 2.7 million bbl to 380.1 million bbl in the week ended July 20, above average for this time of year. Wall Street’s consensus was for a 1 million bbl draw. Gasoline stocks jumped 4.1 million bbl to 210 million bbl. Analysts also expected a 1 million bbl decrease in that category, but both finished gasoline and blending components rose last week. Distillate fuel inventories gained 1.7 million bbl to 125.2 million bbl, outstripping the market’s outlook for an increase of 1.4 million bbl. Nevertheless, distillate stocks remained below average.

Imports of crude into the US increased 696,000 b/d to 9.6 million b/d last week. In the 4 weeks through July 20, crude imports averaged 9 million b/d, down 516,000 b/d from the comparable period a year ago. Gasoline imports last week averaged 1 million b/d, while distillate fuel imports averaged 162,000 b/d.

The input of crude into US refineries rose 258,000 b/d to 15.8 million b/d last week with units operating at 93% capacity. Gasoline production increased to 9.3 million b/d, and distillate fuel production increased to 4.6 million b/d.

Energy prices

The September contract for benchmark US light, sweet crudes gained 36¢ to $88.50/bbl July 24 on the New York Mercantile Exchange. The October contract rose 35¢ to $88.78/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 36¢ to $88.50/bbl.

Heating oil for August delivery inched up 0.55¢ but closed essentially unchanged at a rounded $2.82/gal on NYMEX. Reformulated stock for oxygenate blending for the same month dropped 5.81¢, also closing at $2.82/gal.

The August natural gas contract escalated 7¢ to $3.19/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., climbed 6.1¢ to $3.16/MMbtu.

In London, the September IPE contract for North Sea Brent increased 16¢ to $103.42/bbl. Gas oil for August fell $6.50 to $888.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up 44¢ to $100.51/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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