MARKET WATCH: NYMEX crude steeply declines, natural gas climbs

The front-month crude oil price dropped nearly $2/bbl on the New York market Aug. 19 to settle at less than $95/bbl while the natural gas price for September rose on weather forecasts calling for hotter temperatures, meaning more gas-fired electric power demand.

But NYMEX September oil prices quickly rebounded in early Aug. 20 trading. Gelber & Associates, a Houston consulting firm, issued a note saying forecasts for lingering heat across the southern and eastern US was supporting gas prices.

The Energy Information Administration estimated US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 4.5 million bbl for the week ended Aug. 15 compared with the previous week.

At 362.5 million bbl, crude oil inventories are above the upper limit of the average range for this time of year, EIA said in its weekly petroleum report.

A Wall Street Journal survey reported analysts expected EIA’s inventory to show a 900,000-bbl drop. Separately, the American Petroleum Institute said its estimate showed a 1.4-million-barrel drop in crude supplies.

International oil traders noted that Ukrainian government forces continued fighting with pro-Russian separatists. Russia President Vladmir Putin is scheduled to meet Aug. 26 with Ukraine President Petro Poroshenko in Minsk, Belarus.

Eurasia Group analyst Emily Stromquist told WSJ that existing Western sanctions aimed at Russian businesses and investors likely will have little impact on new oil production growth from East Siberian energy projects and pipeline crude exports to Asia in the next few years.

Gasoline supplies climb

Total US motor gasoline inventories increased by 600,000 bbl for the week ended Aug. 15, which EIA described as being in the middle of the average range. Finished gasoline inventories decreased while blending components inventories increased.

Distillate fuel inventories decreased by 1 million bbl, and EIA said levels are below the lower limit of the average range for this time of year. Propane-propylene inventories rose 2.5 million bbl, which EIA said was above the upper limit of the average range.

US refinery inputs averaged over 16.4 million b/d during the week ended Aug. 15, which was 204,000 b/d more than the previous week’s average. Refineries operated at 93.4% of capacity for the week ended Aug. 15.

Gasoline production decreased last week, averaging 9.2 million b/d. Distillate fuel production increased last week, averaging over 4.9 million b/d.

US crude oil imports averaged about 7.5 million b/d last week, down by 387,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged about 7.7 million b/d, which EIA said was 4.2% below the same 4-week period last year.

Total motor gasoline imports, both finished gasoline and gasoline blending components, averaged 741,000 b/d for the week ended Aug. 15. Distillate fuel imports averaged 142,000 b/d.

Energy prices

The New York Mercantile Exchange September crude oil contract dropped $1.93 on Aug. 19, closing at $94.48/bbl. The October contract was down 89¢ to $92.86/bbl.

The natural gas contract for September rose 8.5¢ to a rounded $3.88/MMbtu. On the US cash market, gas at Henry Hub, La., was up 12¢ to $3.84/MMbtu.

Heating oil for September delivery was up 1.1¢ to a rounded $2.82/gal. Reformulated gasoline stock for oxygenate blending for September delivery rose 3.94¢ to a rounded $2.70/gal.

The October ICE contract for Brent crude delivery edged down 4¢ to $101.56/bbl. The November held steady at $102.30/bbl. The ICE gas oil contract for September gained $2.25 to $855.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $98.03/bbl on Aug. 19, down 9¢.

Contract Paula Dittrick at paulad@ogjonline.com.

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