Sam Fletcher
Senior Writer
HOUSTON, Dec. 6 -- Crude futures prices were virtually unchanged Dec. 5 on the New York market as traders awaited the latest inventory reports, but natural gas futures continued to fall because of forecasts of warmer weather.
On Dec. 6, the US Energy Information Administration reported commercial US inventories of crude fell by 1.1 million bbl to 339.7 million bbl during the week ended Dec. 1. Gasoline stocks dropped 1.1 million bbl to 200 million bbl during the same period. Distillate fuel inventories inched lower by 400,000 bbl to 132.4 million bbl, with a decline in heating oil more than compensated for a slight rise in diesel fuel stocks.
Crude imports into the US increased by 541,000 b/d to 10.3 million b/d. Input into US refineries increased by 319,000 b/d to 15.5 million b/d with units operating at 90.5% of capacity. Gasoline production increased to 9.2 million b/d, while distillate fuel production rose to 4.2 million b/d.
Meanwhile, analysts in the Houston office of Raymond James & Associates Inc. said preliminary data show members of the Organization of Petroleum Exporting Countries have reduced production by just 550,000 b/d, less than half of the group's proposed cut of 1.2 million b/d effective Nov. 1.
"This is generally what we anticipated," the analysts said. "Of course, [these] data are preliminary and will be subject to revisions and a margin of error, but we believe that any way the numbers shake out, there's no way we'll get close to 1.2 million b/d. Saudi Arabia was the only country to implement a meaningful cut (although it was still 100,000 b/d light of what was intended). Going into the meeting on Dec. 14, it's questionable how much credibility the market will give any of OPEC's jawboning," they said.
EIA outlook
In a separate report this week, EIA projected imports of energy to grow moderately as a share of total US demand during the next 25 years because rising prices spur domestic production of crude and impede consumption growth. The Department of Energy agency expects imports to rise to 32% of total US energy consumption in 2030, compared with 30% in 2005.
US demand for liquid fuels and other petroleum products is expected to escalate to 26.9 million b/d in 2030 from 20.7 million b/d in 2005, while domestic liquids production is projected to increase to 10.5 million b/d from 8.3 million b/d, through expansion and improvement in refining capacity. EIA predicts US crude production will increase to 5.9 million b/d in 2017, up from 5.2 million b/d in 2005, with output expected to decline after 2017 to 5.4 million b/d in 2030. The additional US oil is expected to be produced primarily from the deep waters of the Gulf of Mexico, said EIA officials.
US imports of gas are projected to grow to 26 tcf/year by 2030 from 22 tcf/year in 2005, with increased LNG imports compensating for an expected decline in Canadian supplies. Because of permitting problems, a new pipeline to transport Alaskan gas to the Lower 48 markets likely will not come on line before 2018, almost 3 years later than previously expected, said EIA officials.
Energy prices
The January contract for benchmark US light, sweet crudes traded at $61.53-63.25/bbl before closing at $62.43/bbl, down 1¢ for the day in its third consecutive decline on the New York Mercantile Exchange. The February contract lost 11¢ to $63.92/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 46¢ to $62.44/bbl. Unleaded gasoline for January delivery dropped 3.1¢ to $1.64/gal on NYMEX. Heating oil for the same month declined by 1.06¢ to $1.80/gal.
The January natural gas contract declined for the fourth straight session, down 12.1¢ to $7.69/MMbtu on NYMEX. On the US spot market, natural gas at Henry Hub, La., fell 48¢ to $7.37/MMbtu.
In London, the January IPE contract for North Sea Brent crude lost 13¢ to $63.32/bbl. However, the December gas oil contract inched up by 25¢ to $553.50/tonne
The average price for OPEC's basket of 11 benchmark crudes dropped 51¢ to $59.19/bbl on Dec. 5.
Contact Sam Fletcher at [email protected].
