Sam Fletcher
Senior Writer
HOUSTON, Mar. 16 -- Energy prices retreated Mar. 15 with crude futures in the US losing much of the gains from the previous session after the Energy Information Administration reported US crude inventories jumped by 4.8 million bbl to 339.9 million bbl in the week ended Mar. 10, the highest level since May 1999.
Crude futures prices remained above $62/bbl, however, because gasoline inventories dropped 900,000 bbl to 223.9 million bbl during the same period, and distillate fuel stocks fell by 3.9 million bbl to 127.5 million bbl. US imports of crude fell by 205,000 b/d to 9.9 million b/d in the same week. Input of crude into US refineries increased by 313,000 b/d to 14.4 million b/d, with units operating at 85.7% of capacity, EIA said (OGJ Online, Mar. 15, 2006).
US inventories
"The rapid ascent in overall inventory levels relative to normal patterns that characterized the start of the year has now been halted. Within that now flat pattern, products are tightening relative to normal, while crude is building," said Paul Horsnell of Barclays Capital Inc., London. "Over the past 3 weeks, crude oil inventories have built by 7.3 million bbl more than the normal seasonal pattern, while oil products have fallen by 7.6 million bbl relative to the normal seasonal pattern. The dynamics of the gasoline market are little changed, with one of the key questions remaining the path of imports."
Meanwhile, Horsnell said, "[Crude futures] prices fall, but they seem to have difficulty sticking below $60/bbl. Even if that first line of defense around $60 were to fail, we believe that the immediate downside would be limited as a second line would exist just $5 or less lower. That is the point where we would expect key OPEC members to start making noises about defending prices. In all, it does appear that with current market fundamentals, $60 is, in effect, a pretty low price."
On Mar. 16, the EIA reported the withdrawal of 55 bcf of natural gas from US underground storage in the week ended Mar. 10, down from withdrawals of 85 bcf the previous week and 95 bcf a year ago. US gas storage now stands at 1.8 tcf, up 439 bcf from the same period last year and 688 bcf above the 5-year average.
Increased stripping of LPG in the latest period indicates more demand for natural gas, said J. Marshall Adkins in the Houston office of Raymond James & Associates Inc. On the negative side, with only a couple of weeks remaining, he said, "We're heading towards 1.7 tcf in storage at the end of the [winter heating] season." That will be a record high, he said.
Energy prices
The April contract for benchmark US sweet, light crudes lost 93¢ to $62.17/bbl Mar. 15 on the New York Mercantile Exchange. The May contract fell by $1.25 to $63.84/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by 93¢ to $62.18/bbl. Heating oil for April delivery dropped 3.95¢ to $1.78/gal on NYMEX. Gasoline for the same month retreated by 3.69¢ to $1.83/gal. The April natural gas contract declined by 2.4¢ to $7.14/MMbtu.
In London, the April IPE contract for North Sea Brent crude lost $1.03 to $62.94/bbl. However, the April gas oil contract continued to climb, up by $10.25 to $567.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes gained 61¢ to $58.30/bbl on Mar. 15.
Contact Sam Fletcher at [email protected].
