Sam Fletcher
Senior Writer
HOUSTON, Apr. 12 -- Petroleum products futures prices jumped Apr. 11, pulling up near-month crude prices, after the US Energy Information Administration reported another sharp drop in US gasoline inventories to the lowest level since 2001.
EIA said US gasoline stocks fell for the ninth consecutive week, plunging 5.5 million bbl to a below-average level of 333.4 million bbl during the week ended Apr. 6. With the start of the summer driving season fast approaching on May 28, Memorial Day, analysts had been hoping for the first seasonal build in US gasoline supplies, especially after an "unrealistic" draw of 5 million bbl in the prior week.
Meanwhile, the International Energy Agency in Paris said Apr. 12 that inventories of crude and petroleum products among member countries of the Organization for Economic Cooperation and Development fell by 80 million bbl in February due to seasonal refinery maintenance in North America.
IEA estimated that members of the Organization of Petroleum Exporting Countries (excluding Iraq and Angola) reduced their total production by 200,000 b/d to 26.5 million b/d in March. That was 1.2 million b/d below September 2006 levels and contributed to declining crude stocks. EIA revised its 2007 "call-on-OPEC" down by 200,000 b/d to 31.5 million b/d.
"While renewed tensions surrounding Iran provided the catalyst for the run-up in oil prices since mid-March, this recent IEA report illustrates the bullish oil market fundamentals, which should keep prices comfortably above $60/bbl as we enter summer," said analysts in the Houston office of Raymond James & Associates Inc. "Once the market fully incorporates permanent geopolitical risk with the tight global oil supply and demand equation, we believe prices should trend toward $70/bbl," they said.
"Despite the OPEC cuts, US crude oil imports (4-week average) remain up 294,000 b/d vs. a year ago, but gasoline imports (4 weeks average) are down 112,000 b/d," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. With restrained production capacity, US gasoline must remain highly priced to attract more imports and to offset the negative impact of the inverted price ratio between North Sea Brent crude and benchmark light, sweet crudes in the US market, he said.
Energy prices
The May contract for benchmark US crudes gained 12¢ to $62.01/bbl Apr. 11 on the New York Mercantile Exchange. The June contract slipped, however, down 4¢ to $64.84/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 12¢ to $62.02/bbl. Heating oil for May delivery climbed by 1.86¢ to $1.87/gal on NYMEX. The May contract for reformulated blend stock for oxygenate blending (RBOB) escalated by 3.57¢ to $2.16/gal.
The May natural gas contract dropped 1.4¢ to $7.86/MMbtu. On the US spot market, however, gas at Henry Hub, La., jumped 24¢ to $7.97/MMbtu, with colder weather forecast for the near term in key US markets. "A cold snap produced 14% cooler weather than was previously expected last week; however, the week still came in 16% warmer than normal," Raymond James analysts said. LNG, they said, "continues to be a focal point as we have seen an influx of LNG imports in the recent weeks due to warm winters in both Asia and Europe."
EIA in Washington, DC, reported the injection of 23 bcf of gas into US underground storage in the week ended Apr. 6. That was above the consensus of Wall Street analysts; it compared with injections of 58 bcf the prior week and 19 bcf during the same period in 2006. US gas storage is now at 1.59 tcf, down 119 bcf from year-ago levels but 352 bcf above the 5-year average.
In London, the May IPE contract for North Sea Brent crude increased 42¢ to $67.84/bbl. Gas oil for April gained $9.50 to $591.75/tonne.
The average price for OPEC's basket of 11 benchmark crudes rose 70¢ to $63.36/bbl on Apr. 11.
Contact Sam Fletcher at [email protected].
