Sam Fletcher
Senior Writer
HOUSTON, Mar. 29 -- Crude futures prices jumped above $66/bbl in the New York market Mar. 28 among escalating concerns about possible supply disruptions.
Norway's largest private-industry union threatened to strike at the end of this week if it can't reach agreement on pensions and wages with the Federation of Norwegian Industries. Such a strike wouldn't affect Norway's offshore oil and gas production, but just the specter of labor problems was enough to spook a market already worried about geopolitical problems in Nigeria and Iran, analysts said.
An Apr. 5 meeting is scheduled between Nigerian officials and militants in hopes of restoring crude production in the Niger Delta. Some 630,000 b/d, or 26% of Nigeria's normal crude production, has been shut in following sabotage of oil industry facilities and kidnappings of workers in that area. That includes 455,000 b/d shut in by Royal Dutch Shell PLC, which says it will not resume production until the region is pacified.
The United Nations Security Council is to meet Mar. 30 in a continuing effort to compose a statement calling for Iran to halt uranium enrichment. Russia and China oppose language in the statement that suggests punitive measures against Tehran if it refuses to comply.
US inventories
The Energy Information Administration reported Mar. 29 that US commercial crude inventories increased by 2.1 million bbl to 340.7 million bbl in the week ended Mar. 24 vs. a 1.3 million bbl drop the previous week. US crude stocks remain well above the upper end of the average range for this time of year, but Petromatrix GMBH in Zug, Switzerland, disputes EIA's claim that inventories are at the highest level since Apr. 16, 1999.
US crude production is now lower by 1 million b/d than it was in 1999, while US refining capacity is 1.2 million b/d greater. "Hence, instead of being in the same comfort zone as in 1999, the US would be between 40-50 million bbl lower," said Petromatrix analysts. That, they said, justifies "the higher flat price and the higher premium given to disruption factors" (OGJ Online, Mar. 28, 2006).
US gasoline inventories dropped by 5.4 million bbl to 216.2 million bbl in the week ended Mar. 24, and distillate fuel stocks fell 2.5 million bbl to 124.2 million bbl with most of that decline in heating oil.
US imports of crude increased by 769,000 b/d to 10.1 million b/d in the same period. Input of crude into US refineries also increased, up by 85,000 b/d to 14.7 million b/d, with refineries operating at 87% of capacity. Gasoline production increased to 8.3 million b/d, while distillate fuel production decreased to 3.6 million b/d.
Energy prices
The May contract for benchmark US light, sweet crudes shot up by $1.91 to $66.07/bbl Mar. 28 on the New York Mercantile Exchange. The June contract gained $1.77 to $66.92/bbl. On the US spot market, West Texas Intermediate was up by $1.91 to $66.08/bbl. Gasoline for April delivery escalated by 5.57¢ to $1.88/gal on NYMEX. Heating oil for the same month gained 4.66¢ to $1.83/gal.
The April natural gas contract climbed by 14.7¢ to $7.21/MMbtu on NYMEX, "following the whole crude oil complex up," said analysts at Enerfax Daily.
In London, the May IPE contract for North Sea Brent crude increased by $1.36 to $64.97/bbl. Gas oil for April was up by $14 to $572.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes gained $1.03 to $59.05/bbl.
Contact Sam Fletcher at [email protected].
