Sam Fletcher
Senior Writer
HOUSTON, Nov. 8 -- Crude prices fell Nov. 7, wiping out gains from the previous market session, with traders again unsure whether the Organization of Petroleum Exporting Countries will cut production as promised.
Many analysts still expect only a partial reduction of OPEC production at most.
Meanwhile, the US Energy Information Administration said Nov. 8 that commercial US crude inventories inched up by 400,000 bbl to 334.7 million bbl during the week ended Nov. 3. US gasoline stocks declined by 600,000 bbl to 204 million bbl during the same period. Distillate fuel inventories dropped 2.7 million bbl to 138.6 million bbl, with a slight increase in heating oil offset by a significant decline in conventional diesel fuel.
"US oil inventories have fallen heavily relative to their 5-year average for a fourth straight week, bringing the total fall over that period up to 32.5 million bbl or more than 1.1 million b/d," said Paul Horsnell at Barclays Capital Inc., London.
"Gasoline has tightened the fastest, together with diesel. With both gasoline and diesel demand posting strong numbers for October and starting November well, the worries about falling oil demand from a slowing economy do seem to be very horribly wide of the mark," Horsnell said. "Crude inventories fell slightly in the key regions, and crude imports are now level with last year on a 4-week average, and below 2004. As to all the massive marginal excess of oil that we still read about in the press, we can't find it in the global numbers, and we can't find it in the US numbers. The market is tightening, and it is tightening faster than we had expected."
Imports of crude into the US fell by 306,000 b/d to 9.8 million b/d in the latest week. High seas from several storm systems over the weekend made it unsafe for very large crude carriers and ultra-large crude carriers to moor to the Louisiana Offshore Oil Port buoy to offload their crude cargoes 20 miles off the Louisiana coast, said analysts in the Houston office of Raymond James & Associates Inc. in a Nov. 8 report. "LOOP can take up to 1.2 million b/d of crude from tankers and also receives about 300,000 b/d of crude from the Mars platform. It receives about 5% of the daily US consumption of oil. LOOP began receiving tanker cargoes early [Nov. 7] and all of the tankers now lined up to offload their cargoes will be unloaded by [Nov. 11]," the analysts said.
Input of crude into US refineries declined by 124,000 b/d to 15.2 million b/d with units working at 88.1% of capacity. Gasoline production decreased slightly to 8.7 million b/d, while distillate fuel production declined to 4 million b/d.
Energy prices
The December contract for benchmark US light, sweet crudes fell $1.09 to $58.93/bbl Nov. 7 on the New York Mercantile Exchange. The January contract dropped $1.13 to $60.62/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.09 to $58.94/bbl. Heating oil for December delivery lost 3.81¢ to $1.68/gal on NYMEX. Unleaded gasoline for the same month dipped by 0.49¢ to $1.52/gal.
The December natural gas contract gained 26.5¢ to $7.76/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 1.5¢ to $6.75/MMbtu.
In London, the December IPE contract for North Sea Brent crude dropped $1.27 to $58.48/bbl. Gas oil for November lost $6.25 to $530.25/tonne.
The average price for OPEC's basket of 11 benchmark crudes increased by 73¢ to $55.64/bbl Nov. 7.
Contact Sam Fletcher at [email protected].
