MARKET WATCH: Oil futures prices hover below $95/bbl

Crude oil prices on the New York market hovered below $95/bbl on Nov. 4 while natural gas prices declined to their lowest level since Aug. 20, which analysts attributed to robust US oil stockpiles and separate statistics showing underground gas storage above the 5-year average for this time of the year.

The oil and product inventories have built for 6 weeks while refiners slow their processing rates for seasonal maintenance work.

The US Energy Information Administration said crude inventories rose by 4.1 million bbl for the week ended Oct. 25 to 383.9 million bbl (OGJ Online, Oct. 30, 2013).

PIRA Energy Group of New York issued a weekly recap note Nov. 4 saying October’s oil demand weakness is deceptive. Analysts expect US refinery runs will increase during late November. PIRA also forecast that world gross domestic product growth will accelerate during 2014.

“Product demand will soon get a substantial lift to propel refining margins higher and crude oil prices as well after a couple more weeks of softness,” PIRA said.

Meanwhile on the London oil market, Brent prices fell Nov. 4 upon reports from Bloomberg News that Libya might load crude from the Mellitah terminal on Nov. 5 with exports from Hariga port likely within days. Labor disputes had slashed the volumes of oil exports from Libya for weeks.

US natural gas storage has been climbing based on rising production, largely from shale plays. EIA reported estimated working gas in storage in the Lower 48 was 3.78 tcf for the week ended Oct. 25. This represented a net increase of 38 bcf from the previous week. The Oct. 25 gas storage estimate was 120 bcf less than last year at this time, but 58 bcf above the 5-year average of 3.72 tcf, EIA said (OGJ Online, Oct. 31, 2013).

“That is a lot more gas in the ground than the market was betting on back in the spring,” said analyst Stephen Schork in the Nov. 4 Schork Report.

Separately, Stephen Smith Energy Associates of Natchez, Miss., issued a note Nov. 5 saying Stephen Smith, the firm’s president and founder, expects the next EIA gas storage report will show a storage build of 37 bcf.

Energy prices

The New York Mercantile Exchange December crude contract gained a penny on Nov. 4, settling at $94.62/bbl. The January 2014 contract edged up by 2¢ to $94.98/bbl.

Heating oil for December delivery lost 0.8¢ to a rounded $2.87/gal on NYMEX. Reformulated gasoline stock for oxygenate blending for December delivery was off 1.7¢ to a rounded $2.53/gal.

The December natural gas contract on NYMEX declined 6.8¢ settling at $3.445/MMbtu. On the US spot market, the gas price at Henry Hub, La., was $3.385/MMbtu, a decrease of 7.5¢ from Nov. 1.

In London, the December ICE contract for Brent crude oil climbed 32¢ to settle at $106.23/bbl. The January 2014 contract gained 21¢, settling at $106.10/bbl. The November contract for ICE gas oil dropped $11 to $904/tonne.

The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes was $104.22/bbl on Nov. 4, falling 31¢ from Nov. 1.

Contact Paula Dittrick at paulad@ogjonline.com

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