Sam Fletcher
Senior Writer
HOUSTON, July 28 -- Energy markets were mixed on July 27, with crude futures prices dipping despite an expected continued decline in US crude inventories.
The Energy Information Administration said July 27 that commercial US crude inventories plunged by 2.3 million bbl to 317.8 million bbl during the week ended July 22 (OGJ Online, July 27, 2005). However, that was accompanied by a larger-than-expected drop in gasoline stocks, down by 2.1 million bbl to 209.2 million bbl. Distillate fuel stocks escalated by 3.1 million bbl to 125.8 million bbl during the same period.
Still, the agency said, inventories of oil, gasoline, and distillate fuel are at or above the upper end of the average range for this time of year.
Nonetheless, said Paul Horsnell of Barclays Capital Inc. in London, "US weekly data continue to be supportive for prices, with an overall tightening at the top level, and then within that an extension of the relative fundamental strength of gasoline compared to distillates."
He said, "The main source of strength is the late-season surprise in gasoline. Gasoline inventories have fallen below their 5-year average in absolute terms, and are 4.5% below the 5-year average in terms of days of forward cover. The reason for the strength is primarily that distillate cracks have been too strong relative to gasoline cracks. This has led to heating oil output staying up in recent weeks, while gasoline output has fallen back."
Energy prices
The September contract for benchmark US sweet, light crudes dipped by 9¢ to $59.11/bbl July 27 on the New York Mercantile Exchange, but the October contract advanced by 11¢ to $60.12/bbl. On the US spot market, West Texas Intermediate lost 9¢ to $59.12/bbl. Gasoline for August delivery gained 2¢ to $1.72/gal on NYMEX. Heating oil for the same month increased by 1.35¢ to $1.62/gal. The August natural gas contract jumped by 22.2¢ to $7.65/MMbtu.
EIA reported July 28 the injection of 42 bcf of natural gas into US underground natural gas storage during the week ended July 22. That was lower than the consensus of Wall Street analysts and compared with injections of 59 bcf the previous week and 70 bcf during the same period last year. US gas storage now totals nearly 2.4 tcf.
EIA also announced plans to revise its system for estimating US natural gas storage, effective next week when estimates for the week ending July 29 will be released. The agency also will release revised storage estimates based on the new methodology for June 17-July 22.
The new system will no longer estimate the total volume for non-sample companies based on the aggregate volume of the sample. Instead, EIA will analyze data trends on an individual company basis to produce regional and national totals.
In London, the September contract for North Sea Brent crude slipped by 2¢ to $58.01/bbl on the International Petroleum Exchange. Oil gas for August delivery lost $7 to $520.50/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes increased by 17¢ to $52.86/bbl.
Contact Sam Fletcher at [email protected]
