Crude prices continued climbing Dec. 18 amid cautious hope of progress in US budget negotiations and the return of investors to riskier assets as the dollar weakened. The front-month natural gas contract gained 1.6% on the New York market, taking back some of last week’s loss.
But in an apparent setback Dec. 19 to budget talks, President Barack Obama threatened to veto a “Plan B” backup proposal from House Speaker John Boehner and accused Republicans of political posturing. Boehner said he will call for a House vote on his plan Dec. 20.
In other news, Japan's newly elected prime minister is pushing for monetary stimulus of that economy, “aiming for 2% annual inflation in a country that has been in deflation for the better part of 2 decades,” said analysts in the Houston office of Raymond James & Associates Inc.
“Soon, Japan may be exporting not just Priuses and digital cameras but higher asset prices too. Against this backdrop, the Standard & Poor’s 500 Index jumped 1.1% yesterday, and crude followed suit,” RJA said.
US inventories
The Energy Information Administration said Dec. 19 commercial US crude inventories dropped 1 million bbl to 371.6 million bbl for the week ended Dec. 14. That was less than Wall Street’s consensus for a 1.8 million bbl draw.
Gasoline stocks climbed 2.2 million bbl to 219.3 million bbl during the same period despite an increase in blending components. Analysts were expecting a 2 million bbl gain in gasoline. Distillate fuel inventories fell 1.1 million bbl to 117 million bbl, opposite the market’s outlook for a 1 million bbl boost.
Imports of crude into the US were down 100,000 b/d to 8.4 million b/d last week. In the 4 weeks through Dec. 14, US oil imports averaged over 8.3 million b/d, down 288,000 b/d from the comparable period in 2011. Gasoline imports last week averaged 521,000 b/d, and distillate fuel imports averaged 242,000 b/d.
The input of crude into US refineries increased 227,000 b/d to 15.6 million b/d last week with units operating at 91.5% of capacity. Gasoline production decreased to 8.9 million b/d as distillate fuel production increased to 4.9 million b/d.
Energy prices
The January and February contracts for benchmark US light, sweet crudes increased 73¢ each to $87.93/bbl and $88.40/bbl, respectively, Dec. 18 on the New York Mercantile Exchange. On the US spot market, West Texas Intermediate at Cushing, Okla., rose the same amount to match the front-month futures closing price of $87.93/bbl.
Heating oil for January delivery rebound 4.02¢ to $3/gal, wiping out its loss from the previous session on NYMEX. Reformulated stock for oxygenate blending for the same month climbed 3.65¢ to $2.69/gal.
The January natural gas contract continued climbing, up 6¢ to $3.42/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated 7.5¢ to $3.29/MMbtu.
In London, the February IPE contract for North Sea Brent bumped up $1.20 to $108.84 from a small decline in the previous session. Gas oil for January increased $6 to $928.25/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes gained 31¢ to $106.38/bbl.
Contact Sam Fletcher at [email protected]
