MARKET WATCH: Crude price rises in New York market

The front-month crude contract continued climbing, up 0.9% Nov. 1 following an unexpected draw from US inventories, as the recovering transportation network enabled more traders to reach the floors of New York markets.

Trading volumes in the equity market hit a 6-week high as a result, said analysts in the Houston office of Raymond James & Associates Inc. “This morning, crude and natural gas futures are both in red with enthusiasm tempered by a weaker euro and in anticipation of today’s jobs data,” they said.

Meanwhile, anger mounted among impatient East Coast residents over gasoline shortages, power outages, and long waits for relief supplies. Executives from the Department of Homeland Security and the Federal Emergency Management Agency likely will get an earful from storm victims during tours of Staten Island scheduled Nov 2.

Officials estimate 4.5 million homes and businesses in 15 states are still without electricity. Although power is expected to be returned throughout Manhattan by Nov. 3, it may take weeks in many areas before the electrical grid is again working. Forecasts for colder weather in the Midwest and Northeast add to storm victims’ concern.

The Energy Information Administration said Nov. 1 commercial US crude inventories fell 2 million bbl to 373.1 million bbl in the week ended Oct. 26, countering Wall Street’s consensus for a gain of 1.8 million bbl. Crude stocks remain above average for this time of year, however. Gasoline inventories increased 900,000 bbl to 199.5 million bbl in the same period, meeting analysts’ expectations. Both finished gasoline and blending components increased. Distillate fuel stocks dipped by 100,000 bbl to 117.9 million bbl last week, short of the market’s outlook for a loss of 1.4 million bbl (OGJ Online, Nov. 1, 2012).

“Refinery utilization increased slightly to 87.7%, [but] we expect to see a decline in the next report, reflecting the hurricane-related refinery shutdowns this week,” Raymond James analysts said. According to the latest EIA data, US gasoline demand was up 4.1% from the previous week and is up 0.5% from a year ago on a 4-week moving average basis. “Distillate demand was essentially flat,” said Raymond James analysts. “Cushing, Okla., [crude] inventories fell 700,000 bbl to 43.4 million bbl and are currently 11.3 million bbl higher than year-ago levels. With total petroleum demand down 2% week-over-week, total days of supply increased to 46.6 days and are now 0.7 days below year-ago levels.”

Energy prices

The December contract for benchmark US light, sweet crudes gained 85¢ to $87.09/bbl Nov. 1 on the New York Mercantile Exchange. The January contract climbed 84¢ to $87.57/bbl. On the US spot market, West Texas Intermediate at Cushing was up 85¢ to $87.09/bbl.

The new front-month December contract for heating oil declined 2.91¢ to $3.03/gal on NYMEX. Reformulated stock for oxygenate blending for the same month inched up 0.33¢ to 2.63/gal.

The December natural gas contract rose 0.7¢ to $3.70/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., increased 1.5¢ to $3.51/MMbtu.

In London, the December IPE contract for North Sea Brent dropped 53¢ to $108.17/bbl. Gas oil for November fell $15.75 to $942.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes picked up 10¢ to $106.26/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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