MARKET WATCH: Oil prices drop on US Senate committee vote on Syria

Oil prices dropped on the New York futures market Sept. 4 while a US Senate committee discussed a possible air strike against Syria as proposed by President Barack Obama who wants to punish the Syrian government for allegedly using chemical weapons against its citizens.

The Senate Foreign Relations Committee voted 10-7 late on Sept. 4 in approval of a targeted strike in Syria, sending oil futures prices down.

Analysts say congressional debate on possible military intervention means that an actual strike on Syria could be some time away, easing immediate concerns about a possible disruption in world oil supplies coming from the Middle East.

Obama decided during the Labor Day holiday weekend to seek congressional approval. Consequently, US crude futures have pulled back after late August when they reached the highest level since February 2012 (OGJ Online, Feb. 28, 2013).

On Sept. 5, Obama arrived in St. Petersburg, Russia, for meetings with other leaders of the Group of 20 nations. He wants to persuade allies to support the US at least politically even if they do not provide military support. Russian President Vladimir Putin is an ally of Syrian President Bashar al-Assad.

Meanwhile, US natural gas futures prices rose upon news the National Hurricane Center is tracking a tropical wave in the northeast Caribbean that is moving toward Puerto Rico and the Dominican Republic.

Crude inventories

The US government released its weekly inventory report on Sept. 5, one day later than normal because of the Labor Day holiday when government offices were closed.

EIA said commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) for the week ending Aug. 30 decreased by 1.8 million bbl from the previous week. At 360.2 million bbl, US crude oil inventories are near the upper limit of the average range for this time of year.

Crude refinery inputs averaged 15.9 million b/d during the week ended Aug. 30, which was 162,000 b/d higher than the previous week’s average. Refineries operated at 91.7% of capacity last week. Gasoline production decreased last week, averaging 9.1 million b/d. Distillate fuel production increased last week, averaging about 5 million b/d.

US crude oil imports averaged about 8.3 million b/d last week, down by 119,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged over 8.1 million b/d. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 430,000 b/d. Distillate fuel imports averaged 89,000 b/d per day last week.

Energy prices

The October contract for benchmark US light, sweet crudes on the New York Mercantile Exchange fell by $1.31, closing at $107.23/bbl on Sept. 4. The November crude contract fell $1.26 to $106.59/bbl.

Heating oil for October delivery dropped 1.12¢ to settle at $3.137/gal on NYMEX. Reformulated gasoline stock for oxygenate blending for October dropped very slightly, falling less than a penny with the settle price remaining at a rounded $2.86/gal.

The October natural gas contract was up 1.7¢, closing at $3.68/MMbtu on NYMEX. Analysts said this marked the highest front-month settlement since July 24, and they attributed the climb to warm weather forecasts for the Midwest along with reports of a potential tropical system in the Caribbean.

On the US spot market, gas prices at Henry Hub, La., climbed by 3.4¢ to a rounded $3.69/MMbtu.

In London, the October IPE contract for North Sea Brent crude declined by 77¢ to $114.91/bbl. The contract for gas oil settled at $960.75/tonne, up 50¢.

The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes was up 35¢ on Sept. 4, closing at $111.55/bbl.

Contact Paula Dittrick at

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