MARKET WATCH: US oil futures fall more than $2/bbl awaiting inventory report

Crude oil futures fell more than $2/bbl on the New York market during Apr. 22 trading while analysts awaited the Apr. 23 release of a weekly US government inventory report, which showed another rise in oil supply as they had anticipated.

The Energy Information Administration reported US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 3.5 million bbl to 397.7 million bbl total for the week ended Apr. 18 compared with from the previous week.

Current crude oil inventories are well above the average range for this time of year, EIA said. A Wall Street Journal survey showed analysts expected a rise of 2.4 million bbl for the week ended Apr. 18.

EIA has attributed the climbing oil supply to seasonal maintenance for refineries, the opening of a new TransCanada pipeline to the Gulf Coast, and increased US tight oil production.

On the London market, Brent fell modestly on Apr. 22 after a temporary easing of concerns that the Russia-Ukraine conflict could lead to Western sanctions on Russian oil exports.

But on Apr. 23, another round of hostilities appeared likely because the Ukraine government said it would resume military operations to oust rebels from eastern cities. Russia meanwhile has pledged to defend Russian citizens in Ukraine.

Russian Foreign Minister Sergei Lavrov said his country was prepared to retaliate if its “legitimate interests” are directly attacked, and Lavrov compared the situation to a 2008 war over the Georgian region of South Ossetia.

US gasoline supply drops

Total US motor gasoline inventories decreased by 300,000 bbl for the week ended Apr. 18, which EIA was in the lower half of the average range. Both finished gasoline inventories and blending components inventories decreased last week.

Gasoline inventories have reached their lowest level for this time of year since 2011, EIA said.

Distillate fuel inventories increased by 600,000 bbl but are below the lower limit of the average range for this time of year. Propane-propylene inventories rose 1.2 million bbl, which EIA described as in the lower half of the average range.

US refinery inputs averaged 16 million b/d for the week ended Apr. 18, which was 367,000 b/d more than the previous week’s average. Refineries operated at 91% of capacity last week.

Gasoline production decreased for the week ended Apr. 18, averaging 8.9 million b/d. Distillate fuel production increased last week, averaging 5 million b/d.

US crude oil imports averaged 7.8 million b/d for the week ended Arp. 18, down by 475,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged about 7.6 million b/d, 1.4% below the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 448,000 b/d. Distillate fuel imports averaged 95,000 b/d last week.

Energy prices

The New York Mercantile Exchange May crude oil contract price declined by $2.24 to close at $102.24/bbl on Apr. 22, marking the lowest settlement since Apr. 7, and the May contract expired with the end of the trading session. The June contract dropped $1.90 to $101.75/bbl.

The May natural gas contract rose 4¢ to a rounded $4.74/MMbtu. Gas prices climbed upon forecasters saying cooler-than-normal temperatures are expected through early May. Cooler temperatures could extend US heating demand, which would drive gas demand.

Heating oil for May delivery edged down by 1¢ to a rounded $3/gal. Reformulated gasoline stock for oxygenate blending for May delivery increased by less than a penny to remain at a rounded $3.09/gal. The RBOB contract is at its highest since July 2013.

In London the June ICE contract for Brent crude delivery fell 68¢, closing at $109.27/bbl. The July contract dropped 61¢ to close at $108.98/bbl. The ICE gas oil contract for May dropped $6.75 to $920.75/tonne.

The Organization of Petroleum Exporting Countries said for its basket of 12 benchmark crudes was $105.19 on Apr. 22, down 25¢ from the Apr. 21 price.

Contact Paula Dittrick at paulad@ogjonline.com.

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