Sam Fletcher
Senior Writer
HOUSTON, Jan. 2 -- Energy prices dropped during a shortened trading session Wednesday on the New York Mercantile Exchange ahead of the 4-day New Year weekend.
The rollback of commodity prices occurred despite government and industry reports of large declines in US oil inventories.
Inventory numbers
The American Petroleum Institute said late Wednesday that US crude inventories plunged by 8.3 million bbl to 267.5 million bbl during the week ended Dec. 28.
API reported US gasoline stocks jumped by 1.6 million bbl to 202.8 million bbl, while distillate fuel inventories were up by only 78,000 bbl to 130.8 million bbl.
Earlier Wednesday, the US Energy Information Administration reported commercial US crude inventories fell by 3.8 million bbl to 270.7 million bbl during the week ended Dec. 26, more than reversing the previous week's increase (OGJ Online, Dec. 31, 2003). US stocks of distillate fuel increased by only 700,000 bbl to 129.1 million bbl, with the increase in diesel fuel more than offsetting a decrease in heating oil. US gasoline stocks increased by 600,000 bbl to 203.6 million bbl during the week ended Dec. 26, said EIA officials.
The latest EIA data "show a further erosion of crude oil inventory cover but a more significant lessening in oil product market tightness," said Paul Horsnell, head of energy research at Barclays Capital Inc., London, in a weekly report Friday.
"Overall, however, the week's data carry no particularly strong message, with most of the significant factors continuing on their previous courses. Heating oil remains a weather play. Inventories continue to track last year's path, which by demonstration from 2003 is not a good path to follow should winter conditions prove to be normal or colder than normal," he said.
US oil demand at record high
"Us oil demand looks likely to have passed a significant milestone in 2003," said Horsnell. "With all the data and revisions that we have to date, the annual number currently stands at just above 20 million b/d—at 20.013 million b/d, to be overly precise."
This marks the first time US oil demand has exceed 20 million b/d on an annual basis, although Horsnell noted, "The data [are] not yet quite complete and revisions will continue until a final figure is released by the [US] Department of Energy in June."
However, he said, "The level of demand has exceed 20 million b/d in each of the past 6 months (albeit in a few cases by a hair's breadth)." US demand is currently 286,000 b/d more than year-ago levels, "which means that the US provided about 20% of global oil demand growth in 2003," Horsnell said.
Energy prices
The February contract for benchmark US light, sweet crudes lost 27¢ to $32.52/bbl Wednesday on the New York Mercantile Exchange, ending the year at a still-high level. The March position was down by 12¢ to $32.28/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., dropped 23¢ to $32.55/bbl.
Heating oil for January delivery fell by 1.67¢ to 91.27¢/gal Wednesday on NYMEX. Unleaded gasoline for the same month dipped by 0.05¢ to 94.92¢/gal. The February natural gas contract plunged by 41.1¢ to $6.19/Mcf Wednesday on NYMEX.
EIA reported Wednesday afternoon that 80 bcf of natural gas was withdrawn from US underground storage during the week ended Dec. 26. That was down from withdrawals of 151 bcf the previous week and 123 bcf during the same period in 2002 and well below the consensus of Wall Street analysts.
In London, the February contract for North Sea Brent oil gained 43¢ to $30.17/bbl Wednesday on the International Petroleum Exchange. Gas oil for January delivery lost $1.75 to $272/tonne, while the February natural gas contract dipped by 2¢ to the equivalent of $3.28/Mcf on IPE.
NYMEX was closed Thursday and Friday for the New Year's holiday. IPE was closed Thursday.
Contact Sam Fletcher at [email protected].
