MARKET WATCH: NYMEX oil prices make slight gains; Brent jumps on Iraqi violence

Crude oil futures prices settled up slightly on the New York market June 11 after a US government report showed a weekly decline in US oil supplies, while Brent crude prices climbed on the London market on concerns about violence in Iraq where Islamic militants seized the northern cities of Mosul and Tikrit.

The Energy Information Administration estimated US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, declined 2.6 million bbl for the week ended June 6, which was a bigger dip than analysts anticipated (OGJ Online, June 11, 2014).

Oil supplies still remained near record highs set in late April. Meanwhile, supplies of refined gasoline and distillates rose more than expected while product demand fell for a second consecutive week.

Global energy demand continues remarkable growth, driven by China and other emerging markets. Yet this increasing demand comes during a period of robust energy supply, primarily from US and Canada unconventional plays, Wood Mackenzie said June 12 in a long-term analysis of global energy trends.

By 2020, WoodMac forecast growth of North American oil production will outpace the Middle East by 4:1 on a per barrel basis, and by 2030, North American output will have risen by 390 million tonnes of oil equivalent (mtoe) from 2009 levels of 650 mtoe.

“The renaissance of North American gas and oil production is the critical supply-side trend affecting global energy markets in the long term,” said Paul McConnell, WoodMac principal analyst for global trends. “Energy production has undergone an abrupt reversal, which will make the region a net exporter of energy before the 2020s and will redefine global energy markets.”

Separately on June 12, EIA noted an increase in storage gas supplies in the agency’s weekly report on underground natural gas storage in the Lower 48.

EIA estimated gas in storage was 1,606 bcf as of June 6, which was a net increase of 107 bcf from the previous week. Stocks were 727 bcf less than last year at this time and 877 bcf below the 5-year average of 2,483 bcf, EIA said.

Market prices

The New York Mercantile Exchange July crude oil contract price rose 5¢, closing at $104.40/bbl on June 11. The August contract gained 13¢ to $103.62/bbl.

The natural gas contract for July fell 2.2¢ to a rounded $4.51/MMbtu. On the US cash market, gas at Henry Hub, La., was $4.50/MMbtu, down 7¢.

Heating oil for July delivery climbed 2¢ to a rounded $2.90/gal. Reformulated gasoline stock for oxygenate blending for July delivery gained 2.6¢ to $3/gal.

The July ICE contract for Brent crude delivery climbed 43¢, closing at $109.95/bbl. The August contract jumped 51¢ to $109.37/bbl. The ICE gas oil contract for June was up $8.25 to $893/tonne.

The OPEC basket of 12 benchmark crudes was $106.20/bbl on June 11, up 31¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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