MARKET WATCH: Crude barely breaks losing streak

Front-month crude managed a minimal gain May 15 after four sessions of price declines in the New York market. Natural gas continued its increase, up 1%.

“A bearish Department of Energy inventories report left crude flat on the day,” said analysts in the Houston office of Raymond James & Associates Inc. However, the equity market set “a record high for the sixth-straight session,” they said. “The 0.4% gain for the Dow Jones Industrial Average came despite Euro-zone worries, disappointing manufacturing data, and a steeper fall in industrial production than expected.” The SIG Oil Exploration & Production Index and the Oil Service Index were down 0.4% and 0.2%, respectively.

The equity market and natural gas prices were flat while oil prices declined in early trading May 16 among mixed economic indicators. The US Department of Labor reported the consumer price index fell 0.4% in April—the biggest decline since December 2008—primarily because retail gasoline prices fell 8.1% last month. Excluding the decline in fuel cost, other prices primarily were unchanged, officials said.

The US Department of Commerce reported a 16.5% drop in new housing starts to a seasonally adjusted annual rate of 853,000 in April after topping 1 million in March for the first time since 2008. However, applications for building permits rose 14.3% to 1.02 million, the most since June 2008.

In a separate report, DOL officials said there were 360,000 new applications for unemployment benefits last week, up 32,000 from a 5-year low the previous week in the largest increase since late March. The US unemployment rate remains at 7.5% with 4.8 million people receiving unemployment benefits in the week ended Apr. 27, the latest available data.

US inventories

DOE’s Energy Information Administration reported May 16 the injection of 99 bcf of natural gas into US underground storage in the week ended May 10, exceeding Wall Street’s consensus for 94 bcf input. That increased working gas in storage to 1.964 tcf, down 694 bcf from the comparable period a year ago and 83 bcf below the 5-year average.

EIA officials earlier reported commercial inventories of crude dipped 600,000 bbl to 394.9 million bbl last week opposite Wall Street’s consensus for a 500,000 bbl increase. Gasoline stocks were up 2.6 million bbl to 217.7 million bbl in the same period compared with analysts’ expectations of a 1.1 million bbl drop. Both finished gasoline and blending components increased. Distillate fuel inventories rose 2.3 million bbl to 119.9 million bbl, exceeding the market’s outlook for a 500,000 bbl gain (OGJ Online, May 15, 2013).

“The total increase in ‘Big Three’ inventories was larger than expected, with builds in gasoline and distillates, but a draw in crude. Jet fuel and residual fuel oil dipped sharply, capping the overall increase in total petroleum inventories at 1.9 million bbl,” Raymond James analysts said. “The out-of-consensus build in product inventories came amid an increase in imports [up 25% for the week) and lower demand [down 3.1%]. On a 4-week moving average basis, demand is up only 0.1% [for the year]. Better refinery utilization helped drive crude inventories lower. Cushing, Okla., inventories bounced back after 2 consecutive weeks of declines with a 600,000 bbl increase to 49.7 million bbl, which is 4.6 million bbl higher than this time last year.”

Energy prices

The June contract for benchmark US sweet, light crudes inched up 9¢ to $94.30/bbl on the New York Mercantile Exchange. The July contract rose 8¢ to $94.56/bbl. On the US spot market, West Texas Intermediate at Cushing mimicked the June futures contract, up 9¢ to $94.30/bbl.

Heating oil for June delivery increased 0.71¢ to $2.88/gal on NYMEX. Reformulated stock for oxygenate blending for the same month advanced 2.94¢ to $2.87/gal.

The June natural gas contract gained 4.6¢ to $4.07/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., climbed 6¢ to $4.01/MMbtu.

In London, the June IPE contract for North Sea Brent escalated by $1.08 to $103.68/bbl. Gas oil for June fell $14 to $846.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes dropped 63¢ to $99.66/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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