By OGJ editors
HOUSTON, Nov. 6 -- Futures prices for oil and petroleum products plunged Tuesday in New York and London markets in anticipation of increased US inventories. Reports of a dramatic increase in Iraq's oil exports under the United Nations oil-for-aid program also impacted the market.
After trading closed, the American Petroleum Institute reported US oil stocks gained 2.3 million bbl to 291.6 million bbl last week, while distillate inventories, including heating oil and jet fuel, were up 1.5 million bbl to 124.5 million bbl.
US stocks of unleaded gasoline fell by 638,000 bbl to 195 million bbl; however, despite a rise in refinery operations to 90.1% from 87.5% the previous week and an increase of 35,000 b/d in US gasoline production to 8.5 million b/d.
"Driven by higher (oil) imports," up 515,000 b/d to 9.4 million b/d, US crude inventories "reached their highest level in 7 weeks," Matthew Warburton at UBS Warburg LLC, New York, reported Wednesday.
He noted that US Gulf Coast refineries last week registered "their highest input level in 9 weeks."
However, Warburton said, "Gasoline inventories were essentially unchanged (week-to-week) with resurgent imports and robust domestic production offsetting increased implied demand."
"While crude imports may remain firm in the coming weeks due to resurgent Iraqi and OPEC-10 production, the extent of interruptions in Alaska following the weekend earthquake will have a more immediate bearing on near-term US crude inventory levels, given the short-haul nature of this source of supply," he said.
US officials said Wednesday the trans-Alaska pipeline was scheduled to reopen later in the day after it was shut down Sunday afternoon when an earthquake of 7.9 magnitude rocked central Alaska.
BP PLC, a main producer on Alaska's North Slope, earlier reported North Slope producers shut in all but 5% of their 1 million b/d of oil production "as a precaution" (OGJ Online, Nov. 4, 2002). No damage to BP facilities or operations was reported.
The December contract for benchmark US sweet, light crudes plunged 81¢ to $26.14/bbl Tuesday on the New York Mercantile Exchange, while the January position fell 79¢ to $25.65/bbl. Unleaded gasoline for December delivery plummeted 3.36¢ to 74.07¢/gal in a market where price movements for refined products usually are measured by fractions of a penny. Heating oil for the same month dropped 1.53¢ to 71.8¢/gal.
However, the December natural gas contract inched up 2¢ to $3.88/Mcf. "The market is well underneath technical support levels, and that could trigger a reaction upward and a short-covering rally later this week," analysts at Enerfax Daily reported Wednesday. "However, it is likely we haven't seen the lows yet."
In London, the December contract for North Sea Brent oil lost 90¢ to $24.12/bbl on the International Petroleum Exchange. The December natural gas contract lost 3.5¢ to the equivalent of $3.69/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes was down 61¢ to $24.39/bbl Tuesday.
