MARKET WATCH: Energy prices weak in 'uninspired' markets

Energy prices primarily were down in mixed markets Oct. 17 with crude essentially flat in New York as indications of a strengthening economic recovery were tempered by a jump in US inventories.

Trading was “uninspired” because “the smorgasbord of global macro issues driving crude prices hasn't shifted too dramatically in recent weeks,” said analysts in the Houston office of Raymond James & Associates Inc.

Natural gas prices increased ahead of the Energy Information Administration report of 51 bcf of gas injected into US underground storage in the week ended Oct. 12, compared with Wall Street’s consensus for 47 bcf. This increased working gas in storage to 3.776 tcf, up 181 bcf from the comparable period a year ago and 249 bcf above the 5-year average.

EIA earlier said commercial US crude inventories climbed 2.9 million bbl to 369.2 million bbl last week, nearly twice the Wall Street consensus for a 1.5 million bbl gain. Gasoline stocks were up 1.7 million bbl to 197.1 million bbl in the same period, primarily because of increased blending components and far exceeding the cumulative 500,000 bbl gain analysts expected. Distillate fuel inventories fell 2.2 million bbl to 118.7 million bbl, outstripping an anticipated 1.5 million bbl drop (OGJ Online, Oct. 17, 2012).

With distillate fuel stocks still in decline, “there is significant potential for rising crude oil demand from this avenue as we move into the US winter,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.

“Distillate inventories remain particularly low, below the 5-year range we’ve seen at this time of year,” Ground said. “Even in terms of days of supply, the level of distillate stocks has slipped below the seasonal 5-year range.”

He reported, “Some realism in expectations concerning the outcome of the European Union Summit (Oct. 18-19 in Brussels) have suspended euro strength, keeping the common currency on a relatively even keel this morning. The positive sentiment that drove markets upward yesterday is absent. Perhaps this will change should US jobless claims, the Philadelphia Federal Reserve Bank, and leading indicator data confirm yesterday’s indications of a strengthening US economy.”

Energy prices

The November contract for benchmark US sweet, light crudes inched up 3¢ to $92.12/bbl Oct. 17 on the New York Mercantile Exchange. The December contract advanced 5¢ to $92.59/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., followed the front-month futures contract up 3¢ to $92.12/bbl.

Heating oil for November delivery dipped 0.91¢ to $3.19/gal on NYMEX. Reformulated stock for oxygenate blending for the same month dropped 6.36¢ to $2.78/gal.

The November natural gas contract increased 3.3¢ to $3.47/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rose 0.4¢ to $3.27/MMbtu.

In London, the new front-month December IPE contract for North Sea Brent lost 78¢ to $113.22/bbl, further narrowing its premium over WTI. Gas oil for November fell $6.50 to $996.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes lost 85¢ to $110.24/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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