MARKET WATCH: Brent crude oil futures down on lower IEA oil demand forecast

Oil prices settled about 70¢ lower on the New York market Aug. 12 while oil prices on the London market plunged more than $1 to their lowest level since early July 2013 following a report from the International Energy Agency, which lowered its oil demand forecast.

In its monthly oil market report, IEA lowered its 2014 global oil demand growth forecast to 1 million b/d on lower-than-expected second-quarter oil deliveries worldwide and a weaker economic outlook from the International Monetary Fund (OGJ Online, Aug. 12, 2014).

IEA forecast global oil demand growth will accelerate to 1.3 million b/d in 2015.

Reuters reported Aug. 13 that the first shipment of oil since 2013 has left Libya’s Ras Lanuf terminal. Analysts say a resumption of Libyan exports could increase global crude oil supplies.

Libya’s government and rebel forces agreed to reopen ports and oil fields that had been closed for almost a year (OGJ Online, July 8, 2014).

On Aug. 13, the US Energy Information Administration released its weekly petroleum inventory report for the week ended Aug. 8, saying US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 1.4 million bbl from the previous week.

At 367 million bbl, US crude oil inventories are above the upper limit of the average range for this time of year, EIA said.

The American Petroleum Institute said its own calculations indicated the crude oil inventory rose 229,000 bbl for the week ended Aug. 8.

Gasoline inventories drop

Total motor gasoline inventories decreased 1.2 million bbl, which EIA described as being in the middle of the average range. Finished gasoline inventories increased while blending components inventories decreased last week.

Distillate fuel inventories decreased by 2.4 million bbl, and EIA said that level was below the lower limit of the average range for this time of year. Propane-propylene inventories rose 1.8 million bbl, which was above the upper limit of the average range.

US refinery inputs averaged over 16.2 million b/d for the week ended Aug. 8, which was 179,000 b/d less than the previous week’s average. Refineries operated at 91.6% of capacity last week. Gasoline production decreased last week, averaging over 9.5 million b/d. Distillate fuel production decreased, averaging over 4.7 million b/d.

US crude oil imports averaged over 7.8 million b/d, up 283,000 b/d. Over the last 4 weeks, crude oil imports averaged over 7.6 million b/d, 4.6% below the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, averaged 470,000 b/d last week while distillate fuel imports averaged 151,000 b/d.

Energy prices

The New York Mercantile Exchange September crude oil contract fell 71¢ on Aug. 12, closing at $97.37/bbl. The October contract decreased 73¢ to $96.48/bbl.

The natural gas contract for September climbed less than a penny to remain at a rounded $3.97/MMbtu. On the US cash market, gas at Henry Hub, La., was $3.92/MMbtu, down 3¢.

Heating oil for September delivery dropped 3.4¢ to a rounded $2.85/gal. Reformulated gasoline stock for oxygenate blending for September delivery fell 1.8¢ to a rounded $2.73/gal.

The September ICE contract for Brent crude delivery plunged $1.66 to $103.02/bbl. The October contract fell $1.50 to $103.89/bbl. The ICE gas oil contract for September was down $12.75 to $884.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $101.66/bbl on Aug. 12, down 63¢.

Contract Paula Dittrick at paulad@ogjonline.com.

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