MARKET WATCH: Oil futures climb on Western tensions about Russia, Ukraine

Oil futures climbed on both New York and London markets Apr. 29 upon continuing uncertainty regarding futures steps that the West might take against Russia because of the Russia-Ukraine conflict.

Market observers said recent international sanctions imposed against certain Russian individuals and companies were unlikely to hinder Russia’s oil and gas exports (OGJ Online, Apr. 29, 2014).

Yet, analysts noted that US Sec. of State John Kerry on Apr. 28 suggested more economic sanctions are possible against Russia, and pending sanctions could be aimed directly at energy.

European Union officials were slated to meet with energy officials from Russia and Ukraine on May 2 to discuss energy security, the European Commission announced Apr. 29.

EU Energy Commissioner Gunther Oettinger, Ukrainian Energy Minister Yuriy Prodan, and Russia Energy Minister Alexander Novak plan to meet in Warsaw, Poland.

On Apr. 30, the New York energy market focused on the release of a weekly government inventory report.

The Energy Information Administration said US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 1.7 million bbl for the week ended Apr. 25 compared with the previous week.

At an estimated 399.4 million bbl, US crude oil inventories are above the average range for this time of year, EIA said.

The statistics indicated a lower weekly gain than was expected by analysts surveyed by the Wall Street Journal. The WSJ poll results showed analysts expected a 2.2 million bbl rise.

Gasoline inventories remain low

Total motor gasoline inventories increased 1.6 million bbl for the week ended Apr. 25, putting gasoline levels in the lower half of the average range, EIA said. Finished gasoline inventories decreased while blending components inventories increased.

Distillate fuel inventories increased 1.9 million bbl, and that level is below the lower limit of the average range for this time of year, EIA said. Propane-propylene inventories rose 2 million bbl, which the agency said marked the lower half of the average range.

US refinery inputs averaged 16 million b/d during the week ended Apr. 25, which EIA noted was 26,000 b/d lower than the previous week’s average. Refineries operated at 91% of capacity for the week ended Apr. 25.

Gasoline production decreased last week, averaging more than 8.6 million b/d. Distillate fuel production also decreased, averaging more than 4.9 million b/d.

US crude oil imports averaged 7.5 million b/d last week, down 313,000 b/d from the week ended Apr. 18. Over the last 4 weeks, crude oil imports averaged over 7.7 million b/d, which EIA said was 0.1% below the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 651,000 b/d while distillate fuel imports averaged 173,000 b/d.

Energy prices

The New York Mercantile Exchange June crude oil contract price gained 44¢, closing at $101.28/bbl on Apr. 29. The July contract was up 48¢ to $100.59/bbl.

The May natural gas contract was up 3.2¢ to a rounded $4.83/MMbtu.

Heating oil for May delivery increased 1.8¢ to a rounded $2.97/gal. Reformulated gasoline stock for oxygenate blending for May delivery increased 2.3¢ to a rounded $3.06/gal.

In London, the June ICE contract for Brent crude delivery climbed 86¢, closing at $108.98/bbl. The July contract gained 80¢ to close at $108.44/bbl. The ICE gas oil contract for May was up $6.25 to $920.25/tonne.

The Organization of Petroleum Exporting Countries said for its basket of 12 benchmark crudes was $104.95/bbl on Apr. 29, down 48¢. The OPEC Secretariat office was scheduled to be closed May 1.

Contact Paula Dittrick at paulad@ogjonline.com.

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