Sam Fletcher
Senior Writer
HOUSTON, Dec. 7 -- Crude futures prices changed little Dec. 6 as traders awaited an update on US oil inventories, but natural gas futures continued to fall in profit-taking, with the markets apparently confident about supply during the current US cold snap.
As expected, the Energy Information Administration reported Dec. 7 a build in commercial US crude stocks during the week ended Dec. 2, up by 2.7 million bbl to 320.3 million bbl and well above the average range for this time of year. US gasoline and distillate fuel inventories also escalated by 2.7 million bbl each, to respective totals of 202.6 million and 130.6 million bbl. Supplies of both heating oil and diesel increased.
Imports of crude into the US increased by 886,000 b/d to 10.6 million b/d during the same week. Input of crude into US refineries gained by 259,000 b/d to 15.4 million b/d, with refineries operating at 90.6% of capacity. This marked the first week that US refinery utilization has topped 90% since the week ended Sept. 16, just a day before Hurricane Rita made landfall on the upper Texas coast.
Nevertheless, EIA reported US gasoline production fell to 8.8 million b/d while distillate fuel production remained relatively flat at 4.2 million b/d in the latest week. EIA also raised its forecasts for US oil demand to 20.62 million b/d in 2005 from 20.57 million b/d earlier and to 21.1 million b/d in 2006 from 21.04 million b/d, partly because of the recent price declines.
In a separate report, Paul Horsnell of Barclays Capital Inc., London, noted that for the last 4 consecutive weeks, "US data has been relatively stronger for gasoline than for heating oil." He said, "Gasoline demand remains strong, with this week's reading of 9.221 million b/d being the fifth week in a row that implied demand has exceeded 9.1 million b/d."
Horsnell said, "Despite the single week rise in gasoline imports, the 4-week average is still heading back to last year's level, and with refinery output running at high levels already, we remain bullish for gasoline going forward particularly when the seasonal inventory rises cease. By contrast, heating oil output has a long way to rise yet, inventories are rising at a time when they should be flat, and in addition an unseasonal jet fuel inventory increase is adding to the weakness of the distillate pool. Despite the consistent run of weak distillate and strong gasoline data, the first three prompt gasoline months [contracts] have gained only about $2/bbl relative to heating oil over the past 3 weeks, which still appears to us to be an understatement of the message that the data is sending."
The US Minerals Management Service said 132 production platforms on federal leases in the Gulf of Mexico still were not operating Dec. 6, with 503,187 b/d of crude and 2.7 bcfd of natural gas still shut in. Cumulative production lost from federal leases since Aug. 26 totals 98.99 million bbl of crude and 512.1 bcf of natural gas. That's equivalent to nearly 18.1% of annual crude production and a little over 14% of annual natural gas production from those leases.
Energy prices
The January contract for benchmark US light, sweet crudes waffled between $59.55/bbl and 60.45/bbl Dec. 6 on the New York Mercantile Exchange before closing at $59.94/bbl, up just 3¢ for the day. The February contract was unchanged at $60.85/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., gained 3¢ to $59.95/bbl. Heating oil for January delivery lost 1.76¢ to $1.77/gal on NYMEX. Gasoline for the same month dipped by 0.63¢ to $1.58/gal.
The January natural gas contract fell by 17.1¢ to close at $13.49/MMbtu after trading at $13.30-13.83/MMbtu during the day. Analysts at Enerfax Daily said plenty of gas is in storage to meet the extreme cold weather this week. Temperatures in the Northeast US are expected to range below normal through Dec. 9 and remain near or below normal over the weekend.
In London, the January contract for North Sea Brent crude lost 12¢ to $57.61/bbl on the International Petroleum Exchange. Gas oil for December dropped $15.25 to $505.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes increased by 13¢ to $52.85/bbl on Dec. 6.
Contact Sam Fletcher at [email protected].
