Sam Fletcher
Senior Writer
HOUSTON, Mar. 3 -- Energy futures prices dipped slightly Tuesday, as some analysts predicted, but generally held on to most of the gains from recent trading, pending weekly government and industry reports on US inventories of crude and petroleum products.
Energy prices also were buoyed by riots in Venezuela after that country's elections council ruled that opponents lacked enough signatures to force a recall referendum against President Hugo Chávez. If that turmoil intensifies, it's likely to fan the markets' fear of supply disruptions.
Oil stocks increase
Early Wednesday, the US Energy Information Administration reported commercial US inventories of crude increased by 2 million bbl to 275.8 million bbl during the week ended Feb. 27. "This increase may signify an early start to the crude oil build season, as they typically increase by more than 20 million bbl between the end of February and the end of April," said EIA officials.
However, they said, US crude inventories remain 24.2 million bbl below the 5-year average for this time of year.
During the same period, US gasoline stocks fell by 1.4 million bbl to 202 million bbl, which is 9.9 million bbl below the 5-year average. Distillate fuel inventories inched lower by 100,000 bbl to 111.3 million bbl, with diesel fuel falling slightly more than heating oil stocks increased.
US oil imports increased by 830,000 b/d to more than 9.8 million b/d last week in a continuation of its recent seesaw pattern, EIA reported. Most of that increase was on the West and the East Coasts, officials said.
Crude inputs into US refineries averaged nearly 14.7 million b/d during the week ended Feb. 27, up by 201,000 b/d from the previous week's average, with most of that increase evident on the Gulf Coast.
The latest EIA data imply "a further surge in gasoline demand and a cooling off in total [US] demand. Crude oil build is limited to the West Coast, while heating oil data [remained] downbeat for the second week," said Paul Horsnell, head of energy research, Barclays Capital Inc., London.
"Crude inventories rose in aggregate, but they fell outside the logistically isolated West Coast market. In the key Midwest area, inventories continued on their 5-month long downward trek," he said. Gasoline stocks remain "extremely tight, particularly on the East Coast, with the market just being kept under control by unseasonably high production rates compensating for rampant demand and weak import flows," Horsnell said.
"It is not an exaggeration to say that the US gasoline market is now on the cusp of an extremely serious situation," Horsnell reported Wednesday. A possible record price spike of $1.30-$1.50/gal for the near-month gasoline contract on the New York Mercantile Exchange "is not off-the-wall at this point," he said. "If gasoline really were to tip over and spike, this would most probably drag crude oil up to an identifiable short-term peak and a very high one at that."
Energy prices
The April contract for benchmark US light, sweet crudes lost 20¢ to $36.66/bbl Tuesday on NYMEX, while the May position retreated by 19¢ to $35.99/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., declined by 20¢ to $36.68/bbl.
Heating oil for April delivery dropped by 1.34¢ to 93.45¢/gal Tuesday on NYMEX. Gasoline for the same month dipped by 0.38¢ to $1.1428/gal.
However, the April natural gas contract inched up by 1.5¢ to $5.57/Mcf on NYMEX, "lifted by a firm cash [spot] market and some follow-through technical buying after Monday's break of key resistance, despite mostly mild weather this week," said analysts Wednesday at Enerfax Daily.
In London, the April contract for North Sea Brent oil lost 19¢ to $33.15/bbl Tuesday on the International Petroleum Exchange. Gas oil for March delivery gained $3.50 to $283.25/tonne. The April natural gas contract inched up by 1.9¢ to the equivalent of $3.80/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes jumped by 66¢ to $32.48/bbl Tuesday.
Contact Sam Fletcher at [email protected]
