MARKET WATCH: NYMEX crude oil futures drop modestly awaiting inventory

Crude oil futures fell modestly on the New York market July 22 as traders and analysts awaited a weekly US government report on petroleum inventories and as participants across international oil markets awaited developments in the Russia-Ukraine conflict.

Russian-backed separatists in Ukraine are suspected to have shot down a Malaysia Airlines passenger jet. US and Ukraine intelligence officials suggest a missile hit the plane. The incident is under international investigation.

Malaysia Prime Minister Najib Razak said July 22 that Malaysia is studying what actions can be taken under international law in the crash of Malaysia Airlines Flight 17 in Ukraine.

Meanwhile, a team of international aviation safety experts waited early July 23 for access to the crash site. UK authorities said they have received the plane's black boxes for evaluation.

In the US, crude oil supplies have fallen for 4 consecutive weeks, which analysts attribute largely to refineries running at higher-than-usual capacity for this time of year.

The Energy Information Administration estimated commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 4 million bbl for the week ended July 18 compared with the previous week.

At 371.1 million bbl, US crude oil inventories are in the upper half of the average range for this time of year, EIA said in its July 23 petroleum status report. Analysts surveyed by the Wall Street Journal had expected EIA to report that inventories fell by 2.5 million bbl. Separately, the American Petroleum Institute estimated crude oil stock fell 555,000 bbl.

US gasoline supply builds

Total motor gasoline inventories increased by 3.4 million bbl, which EIA described as being in the upper half of the average range. Both finished gasoline inventories and blending components inventories increased last week.

Distillate fuel inventories increased by 1.6 million bbl, and EIA called that level near the lower limit of the average range for this time of year. Propane-propylene inventories rose 2.2 million bbl and are near the upper limit of the average range.

US refinery inputs averaged 16.6 million b/d for the week ended July 18, which was 28,000 b/d fewer than the previous week’s average. Refineries operated at 93.8% of capacity last week.

Gasoline production increased, averaging about 9.4 million b/d. Distillate fuel production increased last week, averaging 5.2 million b/d. US crude oil imports averaged over 7.4 million b/d, down by 20,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged over 7.3 million b/d, which EIA said was 4.2% below the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 625,000 b/d. Distillate fuel imports averaged 91,000 b/d for the week ended July 18.

Energy prices

The New York Mercantile Exchange August crude oil contract dropped 17¢ on July 22, closing at $104.42/bbl. The September contract declined 47¢ to $102.39/bbl.

The natural gas contract for August decreased 77¢ to a rounded $3.77/MMbtu. On the US cash market, gas at Henry Hub, La., was $3.80/MMbtu, down 4¢.

Heating oil for August delivery declined less than a penny to a rounded $2.85/gal. Reformulated gasoline stock for oxygenate blending for August delivery was down a penny to a rounded $2.88/gal.

The September ICE contract for Brent crude delivery dropped 35¢ to $107.33/bbl. The October contract also fell, dropping 46¢ to $107.62/bbl. The ICE gas oil contract for August gained $3 to $882.50/tonne.

The Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for July 22 was $105.74/bbl, up 67¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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