MARKET WATCH: NYMEX crude oil prices down on US supply build

Feb. 20, 2015
US light, sweet crude oil prices for March delivery settled at slightly above $51/bbl on the New York market Feb. 19 after a government weekly report showed a bigger-than-expected build in US oil and petroleum product supplies.

US light, sweet crude oil prices for March delivery settled at slightly above $51/bbl on the New York market Feb. 19 after a government weekly report showed a bigger-than-expected build in US oil and petroleum product supplies.

The Energy Information Administration said US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 7.7 million bbl for the week ended Feb. 13 compared with the previous week. The total was 425.6 million bbl, the Petroleum Status Report showed.

Many analysts anticipate falling US oil production as companies cut drilling in response to low oil prices, but production has yet to show a decline. Demand for crude oil typically falls in February and March as refiners undergo seasonal maintenance, meaning supplies will build.

“The big question is, when do those refineries come back?” said Michael Cohen, analyst at Barclays PLC. Unless world fuel demand picks up, he said, “You’re processing all those barrels and sending out the products into a world that doesn’t need it.”

Meanwhile, a widespread refinery strike continued after the United Steelworkers union instructed members to reject a seventh labor contract offered by Royal Dutch Shell PLC on behalf of companies including Chevron Corp. and ExxonMobil Corp.

Energy prices

The New York Mercantile Exchange March crude oil contract dropped 98¢ to $51.16/bbl Feb. 19 while the April contract declined 99¢ to $51.83/bbl. The March contract was scheduled to expire with the end of Feb. 20 trading.

The natural gas contract on NYMEX for March rose less than 1¢ to remain at a rounded $2.83/MMbtu. The Henry Hub, La., gas price was $2.93/MMbtu on Feb. 19, down 4¢.

Heating oil for March climbed 3.4¢ to a rounded $1.99/gal. Reformulated gasoline stock for oxygenate blending for March delivery rose 4.3¢ to a rounded $1.62/gal.

The April ICE contract for Brent crude oil dropped by 32¢, settling at $60.21/bbl. The May contract was down 37¢ to $60.90/bbl. The ICE gas oil contract for March gave up $9.25 to $568.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on Feb. 19 was $56.29/bbl, up 54¢.

Contact Paula Dittrick at [email protected].

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.