Sam Fletcher
Senior Writer
HOUSTON, May 22 -- Energy futures prices jumped Wednesday with reports of no significant improvement in US inventories of crude, petroleum products or natural gas.
The American Petroleum Institute reported US oil inventories fell by 4.5 million bbl to 282.6 million bbl during the week ended May 16. It said US gasoline stocks increased by 1.5 million bbl to 209.9 million bbl, while distillate inventories jumped by 4.4 million bbl to 104.1 million bbl.
However, the US Energy Information Administration said US oil stocks increased by only 600,000 bbl to 285.1 million bbl, with gasoline down by 200,000 bbl to 208.4 million bbl. US distillate stocks were up by 2.8 million bbl to 102.7 million bbl, said EIA.
"Gasoline inventories fell, even though imports ran at 1.23 million b/d, the highest level ever recorded in weekly data," said Paul Horsnell with J.P. Morgan Securities Inc, London, referring to EIA numbers. The US summer driving season officially starts with the long Memorial Day holiday this weekend.
The "failure of inventories to build with record imports, just as demand begins its seasonal ramp up in a system prone to refinery glitches (particularly in the Mid-West where production fell by 175,000 b/d this week), does raise some concerns," said Horsnell. "There is no doubt that crude inventories are a problem with the deficit (from the 5-year average) now at a yawning 43.7 million bbl."
Meanwhile, in Iraq's oil fields, Horsnell said, "Security is poor, so inspection teams need to arrange escorts from US forces for each foray into the fields, and that is reportedly taking up to 2 weeks to coordinate. Key items of capital equipment and vehicles have been looted, staff have yet to return in sufficient numbers, records are missing, and the toll of recorded damage rises with each inspection made. Timetables for production are constantly being put back, with each fresh timeline premised on the so far unrealized hope of better security."
New York market
The July contract for benchmark US light, sweet crudes gained 62¢ to $29.03/bbl Wednesday on the New York Mercantile Exchange, while the August position advanced by 49¢ to $28.15/bbl. Unleaded gasoline for June jumped by 1.81¢ to 86.83¢/gal. Heating oil for the same month was up 1.44¢ to 74.75¢/gal.
The June natural gas contract increased by 14.2¢ to $6.20/Mcf on NYMEX "amid concerns about low natural gas storage levels highlighted in Federal Reserve Chairman Alan Greenspan's commentary about the shape of the economy," said analysts Thursday at Enerfax Daily. As Greenspan's midmorning speech was being broadcast on a large television screen over the NYMEX floor, the market surged through resistance at $6.11/Mcf, analysts said.
"With bullish inventory concerns and moderate short-term weather that has allowed marketers to buy for storage, the market continues to be jittery and choppy," analysts said. "Hot weather, which will then pit summer electric generation needs against winter storage needs, is forecast for next month. Add to that concerns about another volatile hurricane season, and it is no wonder that prices are still bullish in the long term."
EIA reported Thursday that 90 bcf of natural gas was injected into US underground storage last week. That was up from injections of 72 bcf last week and 68 bcf a year ago, officials said. US gas storage is now at 990 bcf, which is down 785 bcf from the same period last year and530 bcf below the 5-year average.
Other prices
In London, the July contract for North Sea Brent oil rose 56¢ to $26.21/bbl on the International Petroleum Exchange. However, natural gas for June delivery plunged by 11.3¢ to the equivalent of $2.84/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes gained 54¢ to $26.64/bbl Wednesday.
Contact Sam Fletcher at [email protected]
