Sam Fletcher
Senior Writer
HOUSTON, Oct. 18 -- Energy prices fell Oct. 17, with traders awaiting new market directions from ministers of the Organization of Petroleum Exporting Countries at an emergency meeting scheduled Oct. 19 in Qatar.
OPEC ministers generally are expected to agree to a 1 million b/d reduction but apparently are divided over whether to cut their actual production of 27.5 million b/d, excluding Iraq, or reduce the other 10 OPEC members' official quota ceiling of 28 million b/d, said analysts in the Houston office of Raymond James & Associates Inc. Crude futures prices on the New York market hit a low of $57.22/bbl last week, down by more than 25% from a July high of $78.40/bbl.
US inventories
Market expectations of a continued build in US crude inventories also undermined energy prices Oct. 17. Sure enough, the Energy Information Administration said Oct. 18 that commercial US crude stocks jumped by 5.1 million bbl to 335.6 million bbl because of a sharp drop in oil input into US refineries during the week ended Oct. 13. US gasoline inventories plummeted by 5.2 million bbl to 210.2 million bbl, however. Distillate fuel stocks dropped 4.5 million bbl to 145.4 million bbl, with regular and ultralow-sulfur diesel down a total of 4 million bbl compared with a 500,000 bbl drop in heating oil.
Imports of crude into the US increased by 66,000 b/d to 10.4 million b/d during the same period. Crude input into US refineries fell by 483,000 b/d to 14.8 million b/d. With many refineries undergoing seasonal maintenance, units were operating at 86.3% of capacity. Gasoline production rose slightly to 8.9 million b/d while distillate fuel production declined to 3.9 million b/d.
The larger-than-expected drop in gasoline and distillate inventories is "positive for refiners" in that it confirms demand growth and reduced supplies, said Jacques Rousseau, senior energy analyst at Friedman, Billings, Ramsey Group Inc., Arlington, Va. "We expect these trends to continue over the next few weeks and act as a positive [investment] catalyst for [refiners' corporate] stocks," he said.
Energy prices
The November contract for benchmark US light, sweet crudes dropped $1.01 to $58.93/bbl Oct. 17 on the New York Mercantile Exchange. The December contract lost 91¢ to $60.66/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 65¢ to $58.94/bbl. Unleaded gasoline for November delivery fell 2.84¢ to $1.46/gal on NYMEX. Heating oil for the same month declined by 2.27¢ to $1.73/gal.
The November natural gas contract slipped by 0.02¢, with its closing price virtually unchanged at $6.44/MMbtu.
In London, the December IPE contract for North Sea Brent crude declined by 72¢ to $60.94/bbl. The November gas oil contract, however, gained $10.50 to $557.50/tonne.
The average price for OPEC's basket of 11 benchmark crudes escalated by 83¢ to $56.17/bbl on Oct. 17.
Contact Sam Fletcher at [email protected].
