Sam Fletcher
Senior Writer
HOUSTON, Aug. 24 -- Energy prices fell Aug. 23 as the US Energy Information Administration reported the first build in US gasoline inventories in 5 weeks, an indication that perhaps peak summer demand is now declining.
Unleaded gasoline stocks increased by 400,000 bbl to 205.8 million bbl during the week ended Aug. 18, EIA said. Some observers were expecting a 2 million bbl decrease. There was a less-than-expected decline in commercial crude inventories during the same period, down by 600,000 bbl to 330.4 million bbl. Distillate fuel inventories rose by 2.3 million bbl to 135.5 million bbl (OGJ Online, Aug. 23, 2006).
The latest US inventory data were "soft, with oil product inventories rising relative to seasonal norms," said Paul Horsnell, Barclays Capital Inc., London. "On the positive side, gasoline demand has stayed above 9.5 million b/d for a 9th straight week and is expected to strengthen year-over-year given the recent fall in retail prices." Gasoline inventories were drawn east of the Rockies but built west of the Rockies "while gasoline output is still increasing counter-seasonally," he said.
Deborah White, an analyst with Societe Generale, reported that West Coast crude stocks were drawn down because of lost production from Prudhoe Bay. Reduced imports and increased refinery runs have drawn crude inventories along the Gulf Coast. However, Petroleum Administration for Defense District [PADD] 2 in the Midwest, which includes the Cushing, Okla., delivery point for the spot market crude and New York futures contracts, is now "bloated," with inventories "about 3 million bbl above the previous 5-year high," she said. "Little wonder that West Texas Intermediate is trading lower than [North Sea] Brent. US Gulf Coast and Midwest refiners need no more [crude supplies] and Asia does."
White also noted, "The phase-in of new ultraclean diesel is nearly complete." Previous stocks of low-sulfur diesel were drained to less than 2 million bbl as of Aug. 18, "and the trend for ultralow-sulfur diesel stocks was rising," she said.
"Production from BP [PLC]'s Prudhoe Bay field suffered another setback on account of mechanical faults at a gathering center, cutting production by a further 90,000 b/d," said analysts in the Houston office of Raymond James & Associates Inc.
In other news, Nigerian rebels released six foreign hostages they were holding.
Energy prices
The new front-month October contract for benchmark US sweet, light crudes closed at $71.76/bbl, down $1.34 for the day after trading at $71.10-72.94/bbl Aug. 23 on the New York Mercantile Exchange. The November contract lost $1.18 to $72.86/bbl. On the US spot market, WTI at Cushing, Okla., was down by $1.22 to $71.42/bbl. Gasoline for September delivery fell by 7.99¢ to $1.86/gal on NYMEX. Heating oil for the same month dropped 3.4¢ to $2/gal.
The September natural gas contract fell by 13.3¢ to $6.88/MMbtu on NYMEX. EIA reported Aug. 24 the injection of 57 bcf of gas into US underground storage in the week ended Aug. 16. That was below the consensus of Wall Street analysts but up from 37 bcf the previous week. That compares with an injection of 60 bcf during the same period a year ago. US gas storage is now near 2.9 tcf, up by 291 bcf from year-ago levels and 339 bcf above the 5-year average.
In London, the October IPE contract for North Sea Brent crude declined by $1.22 to $72.02/bbl. Gas oil for September lost $8.75 to $643/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes lost 54¢ to $67.45/bbl on Aug. 23.
Contact Sam Fletcher at [email protected].
