Sam Fletcher
Senior Writer
HOUSTON, Mar. 14 -- Crude futures prices continued to tumble Mar. 13 for the fourth consecutive session on the New York market, although other energy commodities recovered some of their earlier losses.
"Fears of a potential recession tied to a subprime lending fallout led the Dow to fall 2% Mar. 13. The sell-off spread to the oil markets," said analysts in the Houston office of Raymond James & Associates Inc. However, they speculated the Mar. 14 report by the Energy Information Administration "may show a fall in gasoline stockpiles for the fifth straight week, which may act as a bullish catalyst for crude prices." EIA said, "Refinery outages in advance of the summer driving season are the primary reason for the decline in gasoline inventories."
Other analysts said they expected a build in commercial US inventories of crude with fewer disruptions of lightering operations due to fog along the Houston Ship Channel.
US inventories
Indeed, EIA reported US crude stocks increased by 1.1 million bbl to 325.3 million bbl during the week ended Mar. 9. Gasoline inventories dropped 2.5 million bbl to 213.9 million bbl during the same week. Distillate fuel declined by 2.8 million bbl to 120.4 million bbl, with most of the loss in heating oil; diesel inventories also declined, but by a much smaller amount. Propane and propylene inventories fell 1 million bbl to 27.7 million bbl.
Imports of crude into the US jumped by 930,000 b/d to 9.8 million b/d during the same week as weather conditions improved along the Houston Ship Channel. Input of crude into US refineries dropped, however, down 165,000 b/d to 14.6 million b/d with refineries operating at 85.6% of capacity. Gasoline production increased to 8.7 million b/d, while distillate fuel production decreased to 3.9 million b/d.
Energy prices
The April contract for benchmark US light, sweet crudes dropped 98¢ to $57.93/bbl Mar. 13 on the New York Mercantile Exchange, while the May contract lost 61¢ to $60.16/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 98¢ to $57.94/bbl. However, the April contract for reformulated blend stock for oxygenate blending (RBOB) climbed by 2.13¢ to $1.93/gal on NYMEX. Heating oil for the same month gained 0.79¢ to $1.69/gal.
The April natural gas contract lost 2¢ to $6.89/MMbtu on NYMEX. On the US spot market, natural gas at Henry Hub, La., dropped 3¢ to $6.78/MMbtu. "Natural gas prices are still trading in a tight band this week, as weather moderates in the near term," said Raymond James analysts.
In London, the April IPE contract for North Sea Brent crude gained 16¢ to $60.90/bbl. The April gas oil contract increased by $8.25 to $537.75/tonne.
"The dichotomy between WTI [benchmark US crude futures] and Brent continues with April Brent now almost $3/bbl higher than WTI," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. The April Brent contract is scheduled to expire Mar. 15. However, Jakob noted, "May Brent is already $1/bbl higher than WTI."
He said, "With the erratic behavior of the WTI rolls it is becoming a no-brainer for the investor holding crude oil length to be on Brent rather than WTI, and this should further accentuate the speculative flight to Brent futures." Jakob said, "Brent is also supported by tight fundamentals. The International Energy Agency's preliminary stock estimate for January, released Mar. 13, is indicating a 29 million bbl draw in European crude oil stocks in January, which puts stocks 23 million bbl below last year, the lowest absolute level since February 2003 and the lowest level for January since 2001."
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes slipped by 2¢ to $57.25/bbl on Mar. 13.
Contact Sam Fletcher at [email protected].
