MARKET WATCH: NYMEX oil prices climb above $103/bbl, natural gas soars

Natural gas prices soared on the New York market Feb. 19 while crude oil prices also climbed upon forecasts for more cold temperatures, which continue driving strong demand for natural gas and heating oil for heating. Natural gas and distillate inventories have declined this winter.

The US Energy Information Administration said commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 1 million bbl for the week ended Feb. 14 compared with the previous week.

At 362.3 million barrels, US crude oil inventories are in the upper half of the average range for this time of year, EIA said.

Separately, the American Petroleum Institute said its own survey indicated a decline of 473,000 bbl in crude supplies for the week ended Feb. 14.

For underground gas storage, EIA estimated 1.443 tcf as of Feb. 14, a net decline of 250 bcf from the previous week. Stocks were 975 bcf less than for the same period last year and 741 bcf below the 5-year average of 2.184 tcf.

The 250 bcf draw for the week ended Feb. 14 compared with a draw of 127 bcf for the same period a year ago, EIA said.

US working natural gas storage inventories are expected to end March near 10-year lows but reach 3.64 tcf by Nov. 1, according to Platts oil and natural gas analytics unit Bentek Energy. In a Feb. 19 market alert, Bentek reported record demand and record storage reduction following the recent polar vortex.

The supply-demand balance considerably during December 2013 and January. However, Bentek expects robust gas production will more than make up for the gap within months.

Distillate inventories drop

US distillate fuel inventories decreased by 300,000 bbl for the week ended Feb. 14, which EIA said was well below the lower limit of the average range for this time of year. Propane-propylene inventories fell 1.2 million bbl and are below the lower limit of the average range.

Total motor gasoline inventories increased by 300,000 barrels last week, and are well above the upper limit of the average range.

US refinery inputs averaged 15.2 million b/d during the week ended Feb. 14, which was 37,000 b/d less than the previous week’s average. Refineries operated at 86.8% of capacity.

Gasoline production decreased, averaging 8.8 million b/d for the week ended Feb. 14. Distillate fuel production also decreased, averaging over 4.5 million b/d, EIA said.

US crude oil imports averaged over 7.4 million b/d last week, down by 508,000 b/d from the previous week. Over 4 weeks, crude oil imports averaged 7.6 million b/d, 1.8% below the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, averaged 410,000 b/d. Distillate fuel imports averaged 329,000 b/d last week.

Energy prices

The New York Mercantile Exchange March crude contract rose 88¢ to settle at $103.31/bbl, marking a record high for 2014. The April contract was $102.84/bbl, up 74¢ for the Feb. 19 closing.

Heating oil for March delivery was up 4.51¢ to a rounded $3.15/gal. Reformulated gasoline stock for oxygenate blending for March delivery decreased 0.76¢ to a rounded $2.82/gal.

The March natural gas contract on NYMEX escalated 59.8¢ to a rounded $6.15/MMbtu. On the US spot market, the gas price at Henry Hub climbed to a rounded $5.97/MMbtu on Feb. 18, up 17.5¢ from Feb. 18.

In London, the April ICE contract for Brent edged up 1¢ to $110.47/bbl. The May contract was up 2¢ to close at $110.13/bbl. The ICE gas oil contract for March climbed $7.50 to $940.50/tonne.

The Organizational of Petroleum Exporting Countries reported its basket of 12 benchmark crudes was $107.15/bbl on Feb. 19, up 62¢.

Contact Paula Dittrick at paulad@ogjonline.com

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