Sam Fletcher
Senior Writer
HOUSTON, Jan. 27 -- Energy prices generally fell on Jan. 26, following reports of an unexpectedly large rise in US crude inventories.
The Energy Information Administration said commercial US crude inventories rose by 3.4 million bbl to 295.6 million bbl in the week ended Jan. 21. Distillate fuel and gasoline stocks dropped by 2.3 million bbl each to 121.5 million and 214.7 million bbl, respectively (OGJ Online, Jan. 26, 2005).
It marked the first decline in gasoline supplies in 10 weeks, as US refineries shut down units for seasonal maintenance. "Gasoline has finally started its seasonal inventory decline, with inventories remaining below the 5-year average in terms of days of forward cover," said Paul Horsnell of Barclays Capital Inc., London. "Crude inventories built again as end-of-year taxation and other temporary effects continue to work their way through the data."
The latest US data also reflected the first week of cold weather after 2 weeks of mild conditions. As a result, Horsnell said, "We thought that the draw in heating oil might disappoint, given that many might want to see a rapid change in the data."
However, he said, "There are lags involved in the chain as consumers use their inventories, order more, and create a drawdown along the chain that is eventually reflected in primary, i.e. recorded, inventories." Therefore, Horsnell said, the latest draw of US heating oil "is actually very strong, and there should be some stronger-than-normal draws in the coming weeks as the lags work themselves out of the data."
Energy prices
The March contract for benchmark US light, sweet crudes fell by 86¢ to $48.78/bbl Jan. 26 on the New York Mercantile Exchange, wiping out the previous day's gain. The April contract also was down by 86¢ to $48.94/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., lost 66¢ to $48.79/bbl. Heating oil for February delivery dropped 2.15¢ to $1.40/gal on NYMEX. However, gasoline for the same month continued to advance, up by 1.5¢ to $1.36/gal.
The February natural gas contract continued to fall, down 1.5¢ to $6.39/MMbtu on NYMEX, "in range-bound trading as options expired" on Jan. 26, said analysts at Enerfax Daily. The February gas contract would expire at the end of trading Jan. 27.
Meanwhile, EIA said Jan. 27 that 230 bcf of gas was withdrawn from US underground storage in the week ended Jan. 21. That compared with withdrawals of 110 bcf the previous week and 195 bcf a year ago. US gas storage now stands at 2.27 tcf, up by 151 bcf from a year ago and 279 bcf above the 5-year average.
In London, the March contact for North Sea Brent crude fell by 86¢ to $48.78/bbl on Jan. 26 on the International Petroleum Exchange.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes increased by 42¢ to $43.10/bbl.
Contact Sam Fletcher at [email protected]
