By OGJ editors
HOUSTON, June 9 -- Energy futures prices resumed their previous downward spiral Tuesday as reports that members of the Organization of Petroleum Exporting Countries exceeded their previous production quotas in May spurred expectations that US government officials Wednesday would report increases in US inventories of both crude and gasoline.
Inventory additions of as much as 2 million bbl each of crude and gasoline were expected and had already been factored into futures market prices, said analysts. Anything less, they said, could trigger another rebound in prices, similar to Monday's isolated flyup.
The US Energy Information Administration reported early Wednesday that US gasoline stocks rose by 2.1 million bbl to 206.4 million bbl during the week ended June 4. However, US crude inventories increased by just 400,000 bbl to 302.1 million bbl in the same period. That's the highest level for crude inventories since the week ended Aug. 23, 2002, but still 11.8 million bbl below the 5-year average for the most recent period, said EIA officials.
US imports of crude averaged nearly 10.5 million b/d last week, down by 220,000 b/d from the previous week, "which was the second largest weekly average ever," said EIA officials. Crude imports from Canada were "relatively large" last week, they said.
Energy prices
The July contract for benchmark US light, sweet crudes plunged by $1.38 to $37.28/bbl Tuesday on the New York Mercantile Exchange, while the August contract was down by $1.32 to $37.43/bbl. On the US spot market, West Texas Intermediate fell to $37.28/bbl Tuesday from Monday's corrected price of $38.65/bbl.
Analysts said crude futures prices likely would have fallen further if not for reports of another US citizen murdered by terrorists in Saudi Arabia, additional sabotage of the pipeline that transports Iraqi crude to an export terminal in Ceyhan, Turkey, and a threatened strike by oil workers in Nigeria. If workers proceed with a general strike in Nigeria, energy prices could ratchet up again, analysts said.
Gasoline for July delivery fell by 3.51¢ to $1.1663/gal Tuesday on NYMEX. Heating oil for the same month was down by 2.81¢ to 96.11¢/gal. The July natural gas contract lost 9.2¢ to $6.12/Mcf Tuesday, "pressured by a late sell-off in crude oil despite a firmer cash [natural gas spot] market [price] in the face of some hot midweek weather in the Northeast and Midwest [US]," said analysts Wednesday at Enerfax Daily.
In London, the July contract for North Sea Brent crude lost 91¢ to $35.05/bbl Tuesday on the International Petroleum Exchange. However, gas oil for June delivery was up by $2.25 to $313.75/tonne. The July natural gas contract increased by 4.5¢ to the equivalent of $3.87/Mcf on IPE.
The average price of OPEC's basket of seven benchmark crudes dipped by 19¢ to $34.45/bbl Tuesday.
