MARKET WATCH: NYMEX oil price jumps on EIA’s reduced oil production forecast

The benchmark US crude oil futures price jumped more than $2/bbl on Apr. 8 after the US Energy Information Administration released a report saying government analysts reduced their earlier oil production forecast for this year and next.

EIA estimates the US will produce 8.37 million b/d during 2014, down from an earlier forecast of 8.39 million b/d. During 2013, US oil production was 7.44 million b/d. For 2015, EIA revised its production forecast to 9.13 million b/d, down from an earlier forecast of 9.16 million b/d.

US total oil consumption for 2014 was forecast at an average 18.9 million b/d, up slightly from EIA’s earlier forecast of 18.89 million b/d.

EIA also increased its price forecast for 2014. Benchmark light, sweet crude was forecast to average $95.60/bbl for the year, up 27¢ from EIA’s forecast made in March, and $2.31/bbl lower than the 2013 average, the agency said in its Short-term Energy Outlook, which was released Apr. 8.

In a weekly petroleum inventory report on Apr. 9, EIA estimated US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 4 million bbl for the week ended Apr. 4 compared with the previous week. At 384.1 million bbl, oil inventories are in the upper half of the average range for this time of year, EIA said.

A Wall Street Journal survey showed analysts had expected crude oil inventories to rise 1 million bbl for the week ended Apr. 4. Separately, the American Petroleum Institute estimated crude oil inventories rose 7.1 million bbl for that period.

Gasoline inventories decline

Total motor gasoline inventories decreased 5.2 million bbl for the week ended Apr. 4, which EIA said was well below the lower limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week.

Distillate fuel inventories increased 200,000 bbl, and that level is near the lower limit of the average range for this time of year. Propane-propylene inventories rose 1 million bbl, which EIA described as being near the lower limit of the average range.

Refinery crude inputs averaged more than 15.3 million b/d during the week ended Apr. 4, which was 22,000 b/d more than the previous week’s average. Refineries operated at 87.5% of capacity last week. Gasoline production increased, averaging 9.4 million b/d. Distillate fuel production increased last week, averaging 4.8 million b/d.

US crude oil imports averaged more than 7.3 million b/d for the week ended Apr. 4, up 481,000 b/d from the previous week. Over 4 weeks, crude oil imports averaged about 7.3 million b/d, 6.6% below the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, averaged 502,000 b/d while distillate fuel imports averaged 318,000 b/d last week.

Energy prices

The New York Mercantile Exchange May crude oil contract price escalated $2.12 on Apr. 8, closing at $102.56/bbl. The June contract climbed $2.02 to $101.81/bbl.

The May natural gas contract gained 5.8¢ to a rounded $4.53/MMbtu. The Henry Hub cash price for gas was unavailable on Apr. 8.

Heating oil for May delivery climbed 4.37¢ to a rounded $2.93/gal. Reformulated gasoline stock for oxygenate blending for May delivery increased 5.4¢ to a rounded $2.98/gal.

In London, the May ICE contract for Brent crude delivery gained $1.85, closing at $107.67/bbl. The June contract was up $1.80 to $107.62/bbl. The ICE gas oil contract for April climbed $5.25 to $890.75/tonne.

The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes for Apr. 8 was $103.16/bbl, up $1 from the previous trading session.

Contact Paula Dittrick at paulad@ogjonline.com.

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