By OGJ editors
HOUSTON, July 22 -- Energy futures prices were mixed Wednesday after the US Energy Information Administration reported a significant drop in US crude inventories along with an unexpectedly large build in gasoline stocks.
Commercial US crude inventories plunged by 3.6 million bbl to 299.3 million bbl during the week ended July 16, while gasoline stocks jumped by 2.5 million bbl to 208.4 million bbl, EIA reported Wednesday (OGJ Online, July 21, 2004). Distillate fuel stocks increased by 1.7 million bbl to 118.4 million bbl.
With last week's falloff, US crude stocks "are starting to make up for the absence of the decline in inventories that was anticipated in June," said Paul Horsnell, head of energy research, Barclays Capital Inc., London. "Gasoline inventory numbers are very weak, although we would caution against using [the latest] numbers in isolation. We still expect a strong seasonal inventory decline to commence in coming weeks."
Energy prices
The September contract for benchmark US light, sweet crudes gained 14¢ to $40.58/bbl Wednesday on the New York Mercantile Exchange, while the October position advanced by 21¢ to $40.09/bbl. On the US spot market, however, West Texas Intermediate at Cushing, Okla., dipped by 3¢ to $40.83/bbl.
Heating oil for August delivery increased by 0.56¢ to $1.0827/gal Wednesday on NYMEX. However, gasoline for the same month was down by 0.34¢ to $1.2428/bbl. The August natural gas contract jumped by 9.4¢ to $5.93/Mcf, "up for the second straight session as spot demand remained strong, keeping physical prices at parity with front-month futures," said analysts Thursday at Enerfax Daily. "Without a clear change in fundamentals such as a shift in the weather or a storage surprise, prices are likely to stay range-bound between $5.80-6.02[/Mcf] in the short-term," they said.
Early Thursday, EIA reported the injection of 72 bcf of natural gas into US underground storage in the week ended July 16, down from 108 bcf last week and 77 bcf a year ago. The latest injection figure was below Wall Street's consensus. Storage now stands above 2.2 tcf, representing a surplus of 246 bcf from the same period last year and 57 bcf above the 5-year average.
In London, the September contract for North Sea Brent crude rose by 15¢ to $37.16/bbl Wednesday on the International Petroleum Exchange. Gas oil for August delivery lost $3.75 to $346.25/tonne. The August natural gas contract was down by 0.94¢ to the equivalent of $4/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries declined by 33¢ to $36.16/bbl Wednesday. Purnomo Yusgiantoro, OPEC's conference president and energy minister for Indonesia, told reporters that the 10 member countries, other than Iraq, that are still subject to the group's production quota are now producing some 2 million b/d above the lid of 26 million b/d that is supposed to go into effect with an Aug. 1 hike of 500,000 b/d.
"We remain firm in our resolve to continue to closely monitor market developments and to do everything we can to restore prices to reasonable levels," he said. "We successfully operated our price band mechanism [of $22-28/bbl] for 3 years and we have every intention of ensuring its return to full effectiveness as soon as we can."
