MARKET WATCHCrude futures prices slip

Aug. 17, 2005
Crude futures prices slipped slightly on Aug. 16 as traders anticipated another report this week of a build in commercial US inventories.

Sam Fletcher
Senior Writer

HOUSTON, Aug. 17 -- Crude futures prices slipped slightly on Aug. 16 as traders anticipated another report this week of a build in commercial US inventories.

Sure enough, the Energy Information Administration said Aug. 17 that US crude stocks increased for the third consecutive week through Aug. 12, but only by 300,000 bbl—far below the expectations of several industry analysts—to 321.1 million bbl.

Moreover, US gasoline stocks plunged by 5 million bbl to 198.1 million bbl in the week ended Aug. 12, near the bottom of the average range for this time of year, said EIA officials. Distillate fuel inventories increased by 1.2 million bbl to 131.1 million bbl, with diesel accounting for most of that gain.

Input of crude into US refineries fell by 331,000 b/d to some 15.6 million b/d during the same period, with refineries operating at 93.5% of capacity. Production of both gasoline and distillate fuels declined, EIA said.

Imports of crude into the US also declined in the latest period, down by 752,000 b/d to 10.3 million b/d.

Earlier this week, Venezuelan President Hugo Chávez again threatened to stop oil exports from Venezuela to the US because of growing tensions between the two countries. In an address to an international youth festival in Caracas, Chávez accused the US of spying on his government through the US Drug Enforcement Administration and of planning to invade Venezuela. US officials have denied both charges.

EIA lists Venezuela as the fourth largest exporter of crude to the US, averaging 1.3 million b/d. DEA claims Venezuela also is a primary transport route for cocaine from neighboring Columbia.

Energy prices
The September contract for benchmark US light, sweet crudes slipped by 19¢ to $66.08/bbl Aug. 16 on the New York Mercantile Exchange. The October contract lost 37¢ to $66.70/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by 19¢ to $66.09/bbl.

Heating oil for September delivery dipped by 0.52¢ to $1.86/gal on NYMEX. However, gasoline for the same month gained 2.15¢ to $1.98/gal, sparking an early rally in energy commodity prices that the market couldn't sustain. The September natural gas contract escalated by 21.2¢to $9.75/MMbtu on NYMEX, "amid steady buying in the cash [spot natural gas] market that helped maintain a strong physical premium to futures [contracts] despite milder weather this week," said analysts at Enerfax Daily.

In London, the September contract for North Sea Brent crude fell by 17¢ to $65.41/bbl on the International Petroleum Exchange. The September gas oil contract dropped by $1 to $588.25/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes lost 16¢ to $58.89/bbl on Aug. 16.

Contact Sam Fletcher at [email protected]