MARKET WATCH: NYMEX crude oil, products decline on inventory build

Crude oil futures prices fell more than $2/bbl on the New York market after a weekly US government report showed a larger-than-expected gain in crude supplies.

Meanwhile, the US Department of Energy announced plans Mar. 12 to sell as much as 5 million bbl of sour crude out of Strategic Petroleum Reserve sites along the Gulf Coast. Officials said they wanted to test the SPR’s capabilities. Bids to purchase the oil are due Mar. 14, and delivery will take place in April, a notice of sale indicated.

Jan Stuart, head of energy research for Credit Suisse Group AG, said the SPR sale could “have a little bit of an impact” on trade because refineries can buy less sour crude from Mexico, Venezuela, and Brazil.

Sour crude imports from the Middle East for April delivery already were placed, he said.

The US Energy Information Administration said on Mar. 12 that crude oil supplies, excluding the SPR, rose 6.2 million bbl for the week ended Mar. 7. At 370 million bbl, crude oil inventories are in the upper half of the average range for this time of year, EIA said.

Analysts surveyed by the Wall Street Journal has expected an increase of 2 million bbl. Crude oil supplies have risen for 8 consecutive weeks.

Estimated working gas in underground storage was a rounded 1 tcf as of Mar. 7, EIA said in its natural gas inventory released Mar. 13. The 1 tcf level marked a net decline of 195 bcf from the previous week. Stocks were 958 bcf less than last year at this time and 858 bcf below the 5-year average of a rounded 1.86 tcf.

Gasoline inventories decline

The petroleum inventory showed total motor gasoline stocks decreased 5.2 million bbl for the week ended Mar. 7, and those levels are near the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased.

Distillate fuel inventories decreased 500,000 bbl last week and are below the lower limit of the average range for this time of year. Propane-propylene inventories fell 1.1 million bbl and are near the lower limit of the average range.

US refinery inputs averaged 15 million b/d during the week ended Mar. 7, which was 225,000 b/d fewer than the previous week’s average. Refineries operated at 86% of capacity.

Gasoline production increased last week, averaging nearly 9.4 million b/d. Distillate fuel production increased slightly last week, averaging more than 4.6 million b/d.

US crude oil imports averaged more than 7.3 million b/d, up 199,000 b/d. Over the last 4 weeks, crude oil imports averaged more than 7.2 million b/d, which was 5.3% less than the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 395,000 b/d.

Energy prices

The New York Mercantile Exchange April crude oil contract fell $2.04 on Mar. 12, closing at $97.99/bbl. It was the lowest front-month settlement price since Feb. 6. The May contract lost $1.91 to settle at $97.68/bbl.

The April natural gas contract gave up 11.5¢ to $4.49/MMbtu. On the US spot market, the gas price at Henry Hub was up 1.2¢ to a rounded $4.68/MMbtu.

Heating oil for April delivery dropped 3.5¢ to a rounded $2.92/gal. Reformulated gasoline stock for oxygenate blending for April delivery was down 1.12¢ to a rounded $2.95/gal.

In London, the April ICE contract for Brent crude delivery declined 53¢, closing at $108.02/bbl. The May contract also dropped 53¢ to close at $107.35/bbl. The ICE gas oil contract for March remained unchanged at $908.75/tonne.

The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes was $103.75/bbl on Mar. 12, gaining 63¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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