MARKET WATCH: Oil prices rally; gas prices retreat

Oil prices continued to rally with the front-month crude contract up 1.2% Apr. 9 in the New York futures market despite a weaker dollar. Natural gas continued falling, however, with the front-month futures contract down 1.6%.

Overnight, China posted an $884 million trade deficit for March with a 14.1% gain in imports outstripping a 10% gain in exports. Analysts said it may indicate recovery of China’s domestic demand for commodity imports. They had expected a 5.2% increase in imports and a 10.5% increase in exports.

However, Marc Ground at Standard New York Securities Inc., the Standard Bank Group, said, “Looking at imports of crude oil, the numbers are not so promising. Net imports fell 2.4% year-over-year in March, off the back of a 7.7% fall in February (although it was at least partly due to the Lunar New Year slowdown). Should this mark the beginning of a trend of more subdued crude oil demand from China, we could see Brent prices remain below $110/bbl over the coming months.”

US inventories

The Energy Information Administration said Apr. 10 commercial US crude inventories inched up 300,000 bbl to 388.9 million bbl in the week ended Apr. 5, far short of Wall Street’s consensus for a 1.5 million bbl build. Gasoline stocks climbed 1.7 million bbl to 222.4 million bbl in the same period, opposite analysts’ expectations of a 1.5 million bbl withdrawal. Finished gasoline inventories decreased while blending components increased. Distillate fuel stocks dipped 200,000 bbl to 112.8 million bbl last week; the market forecast a 1.5 million bbl drop.

Imports of crude into the US fell 211,000 b/d to 7.7 million b/d last week. In the 4 weeks through Apr. 5, US crude imports averaged 7.8 million b/d, down 1.2 million b/d from the comparable period in 2012. Gasoline imports last week averaged 876,000 b/d, and distillate fuel imports averaged 139,000 b/d.

The input of crude into US refineries increased 106,000 b/d to 15.1 million b/d last week with units operating at 86.8% of capacity. Gasoline production decreased to 8.8 million b/d, however, while distillate fuel production increased to 4.5 million b/d.

Energy prices

The May contract for benchmark US light, sweet crudes rose 84¢ to $94.20/bbl Apr. 9 on the New York Mercantile Exchange. The June contract gained 83¢ to $94.51/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 84¢ to $94.20/bbl.

Heating oil for May delivery inched up 0.76¢ to $2.96/gal on NYMEX. Reformulated stock for oxygenate blending for the same month increased 3.31¢ to $2.94/gal.

However, the May natural gas contract lost 6.5¢ to $4.02/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., fell 11.5¢ to $4.07/MMbtu.

In London, the May IPE contract for North Sea Brent climbed $1.57 to $106.23/bbl. Gas oil for April was down $2.25 to $878.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 37¢ to $102.72/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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