MARKET WATCH: Crude, gas prices decline in mixed market

Markets were mixed Jan. 23 with both crude and natural gas down in New York.

“Initial support for oil prices came from optimism over the prospect that US politicians would pass a bill to push the debt limit ceiling out to May 19,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. However, after the House passed that measure, he said, “Optimism faded, not surprisingly as this is merely a kicking of the can down the road.”

Price of the new front-month crude futures contract fell 1.5% “on news of Seaway pipeline delivery constraints cutting back capacity to near pre-expansion levels, along with expectations of [US] inventory builds,” analysts in the Houston office of Raymond James & Associates Inc. reported. “Natural gas edging down didn't help stocks either.” The SIG Oil Exploration & Production Index declined 1.6% while the Oil Service Index was held “to an earnings-driven 0.3% gain.”

Raymond James analysts also reported, “The European Union is proposing a 9.5% duty on all ethanol imported from the US to offset subsidies received by producers in the US.”

 

US inventories

The US Energy Information Administration said Jan. 24 commercial inventories of  benchmark crudes was up 2.8 million bbl to 363.1 million bbl in the week ended Jan. 18, surpassing Wall Street’s consensus for a 2.2 million bbl addition.

Gasoline stocks fell 1.7 million bbl to 233.3 million bbl, contrary to analysts’ expectations of a 1.3 million bbl build. Finished gasoline inventories increased while blending components decreased. Distillate fuel stocks climbed 500,000 bbl to 132.9 million bbl. Analysts had anticipated no change.

Imports of crude into the US declined 300,000 b/d to 7.7 million b/d last week. In the 4 weeks through Jan. 18, US crude imports averaged 7.8 million b/d, down by 1.2 million b/d from the comparable period in 2012. Gasoline imports last week averaged 430,000 b/d while distillate fuel imports averaged 217,000 b/d.

The input of crude into US refineries dropped 895,000 b/d to 14.2 million b/d last week with units operating at 83.6% of capacity. Gasoline production increased to 8.9 million b/d, but distillate fuel production decreased to 4.3 million b/d.

EIA also reported the withdrawal of 172 bcf of natural gas from US underground storage last week, above the Wall Street consensus for a 169 bcf draw. That left 2.996 bcf of working gas in storage, down 157 bcf from a year ago but 320 bcf above the 5-year average.

 

Energy prices

The new front-month March contract for benchmark US sweet, light crudes dropped $1.45 to $95.23/bbl Jan. 23 on the New York Mercantile Exchange. The April contract lost $1.32 to $95.75/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., declined $1.01 to match the $95.23 closing price of the March futures contract.

Heating oil for February delivery advanced 0.99¢ to $3.08/gal on NYMEX. Reformulated stock for oxygenate blending for the same month inched up 0.39¢ but closed essentially unchanged at a rounded $2.83/gal.

The February natural gas contract dipped 0.4¢ to $3.55/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., retreated 3.3¢ and also closed at $3.55/MMbtu.

In London, the March IPE contract for North Sea Brent increased 38¢ to $112.80/bbl. Gas oil for February rose $1 to $970.75/tonne.

The Vienna office of the Organization of Petroleum Exporting Countries closed Jan. 24 with no update of the basket price for its 12 benchmark crudes.

Contact Sam Fletcher at samf@ogjonline.com

 

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