MARKET WATCH: Energy prices slip lower in worried markets

Energy prices generally closed marginally lower Dec. 27 after recouping much of their morning losses on reports a special session of the US House of Representatives will be called Dec. 30 in a last-minute attempt to pass a fiscal budget and forestall automatic tax hikes and spending cuts that otherwise will take effect Jan. 1.

Traders nervous over the pending setback to US economic recovery virtually ignored a week-long winter storm that brought freezing temperatures and heavy snowfall through Midwest and Atlantic coastal states and was still dumping snow Dec. 28 in New England. More than 1,200 commercial flights were canceled Dec. 27 due to inclement weather.

Equity stock prices edged lower for the 5th consecutive day in early trading Dec. 28; if the market still in the red at the end of the day, it will be the longest losing streak in 3 months.

US inventories

In its weekly report delayed by the Christmas holiday, the Energy Information Administration said Dec. 28 commercial US crude inventories declined 600,000 bbl to 371.1 million bbl, short of Wall Street’s consensus for a 1.8 million bbl drop in the week ended Dec. 21. Gasoline inventories climbed 3.8 million bbl to 223.1 million bbl in the same period, surpassing analysts’ outlook for a 900,000 bbl increase. Finished gasoline inventories increased while stocks of blending components decreased. Distillate fuel inventories escalated 2.4 million bbl to 119.4 million bbl, counter to market expectations of a 900,000 bbl loss.

The American Petroleum Institute reported a drop of 1.2 million bbl to 370.5 million bbl of crude for the same week, with gasoline up 2.4 million bbl to 215.8 million bbl and distillates gaining 2.9 million bbl to 118.8 million bbl.

EIA said imports of crude into the US dropped 374,000 b/d to 8 million b/d last week. In the 4 weeks through Dec. 21, US oil imports averaged 8.3 million b/d, down 294,000 b/d from the comparable period in 2011. Gasoline imports last week averaged 602,000 b/d, and distillate fuel imports averaged 214,000 b/d.

The input of crude into US refineries was down 266,000 b/d to 15.3 million b/d last week with units operating at 90.3% of capacity, EIA reported. Gasoline production increased to 9.5 million b/d, and distillate fuel production rose to 4.9 million b/d.

EIA also reported the withdrawal of 72 bcf of natural gas from US underground storage last week. That left 3.652 tcf of working gas in storage, which is 81 bcf more than the comparable period a year ago and 413 bcf above the 5-year average.

Energy prices

The February contract for benchmark US light, sweet crudes dipped 11¢ to $90.87/bbl Dec. 27 on the New York Mercantile Exchange. The March contract declined 12¢ to $91.31/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., followed the front-month futures contract down 11¢ to $90.87/bbl.

Heating oil for January delivery gained 2.1¢ to $3.07/gal, however, on NYMEX. Reformulated stock for oxygenate blending for the same month inched up 0.55¢ to $2.82/gal.

The January natural gas contract dropped 3.8¢ to $3.35/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., declined 2.2¢ to $3.33/MMbtu.

In London, the February IPE contract for North Sea Brent retreated 27¢ to $110.80/bbl. Gas oil for January lost $3.75 to $927.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes climbed $1.11 to $108.03/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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