Sam Fletcher
Senior Writer
HOUSTON, Apr. 4 -- In a surprise announcement during an Apr. 4 press conference, President Mahmoud Ahmadinejad said Iran will free eight British sailors and seven Royal Marines as an Easter holiday "gift" to the British people.
Energy prices fell Apr. 3 as UK and Iranian officials indicated their willingness to negotiate the release of the 15 captives seized Mar. 23 in the Persian Gulf by naval units of Iran's Revolutionary Guard.
Ahmadinejad said the prisoners would be taken to an airport following his news conference to begin their trip home. However, other Iranian officials reported the 15 would be released to British diplomats in Tehran and were expected to leave Iran Apr. 5.
UK officials maintain that data from a position-tracking satellite prove the British personnel were 1.7 nautical miles inside Iraqi waters when they were illegally seized after inspecting a merchant ship for possibly smuggled goods just outside the Shatt al-Arab waterway dividing Iraq and Iran.
Iran has refused to admit any wrongdoing, however. Ahmadinejad made his announcement after pinning a medal on the commander of the Iranian unit who took the prisoners. He also reiterated during the conference that Iran had a legal right to put the British personnel on trial for violating Iranian territory.
Meanwhile, an Iranian diplomat kidnapped Feb. 4 in Iraq was released Apr. 3 by his captors. Iran had claimed the diplomat was kidnapped by an Iraqi military unit commanded by US forces. The diplomat, the Iranian embassy's second secretary, was released in Baghdad "as mysteriously as he was abducted in early February," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. Whether that influenced Iran's release of the 15 captives is unknown.
The release of the British captives likely will quiet some traders' worries about a possible armed conflict that would restrict oil shipments through the Strait of Hormuz. Nevertheless, Jakob said, "Iran will remain the key directional input in front on an upcoming long Easter weekend."
US inventories
The Energy Information Administration said on Apr. 4 that commercial US crude inventories jumped by 4.3 million bbl to 332.7 million bbl during the week ended Mar. 30. US gasoline stocks fell by 5 million bbl to 205.2 million bbl during the same period, marking 8 consecutive weeks of declines. Gasoline had dropped 300,000 bbl the prior week, and some observers were expecting a smaller draw in this latest report as refineries increased operating capacity.
Meanwhile, distillate fuel inventories were unchanged at 118 million bbl; heating oil inventories fell during the week, which marked the official end of the winter heating season, while diesel stocks made a modest gain. Propane and propylene inventories dipped by 100,000 bbl to 25.1 million bbl.
Imports of crude into the US increased by 613,000 b/d to 10.2 million b/d during that week. Input of crude into US refineries dropped, however, down 115,000 b/d to 14.8 million b/d. Refineries operated at 87% capacity during the week, unchanged from the prior week. Gasoline production decreased to 8.8 million b/d, while distillate fuel production increased slightly to 4.1 million b/d.
Energy prices
The May contract for benchmark US light, sweet crudes lost $1.30 to $64.64/bbl Apr. 3 on the New York Mercantile Exchange. The June contract dropped $1.26 to $66.29/bbl. On the US spot market, West Texas Intermediate was down $1.30 to $64.65/bbl. The May contract for reformulated blend stock for oxygenate blending (RBOB) lost 2.51¢ to $2.02/gal on NYMEX. Heating oil for the same month dropped 2.38¢ to $1.84/gal.
The May natural gas contract fell 24.5¢ to $7.43/MMbtu on NYMEX. On the US spot market, natural gas at Henry Hub, La., lost 6.5¢ to $7.55/MMbtu. "Natural gas has followed crude for the last week despite other things going on in the market, including the upcoming cold snap," said analysts at Enerfax Daily. "The nation is expecting one more cold snap in the Northeast and Midwest this week that would spark demand for heating, followed by springtime weather."
Enerfax analysts also noted that speculative traders are holding a record 65,666 short options and futures positions in the gas market. "Gas traders waited [Apr. 3] to see how far prices would drop before buying back contracts to cover their short positions. Such a large amount of open positions could spar a short-covering rally," they said.
In London, the May IPE contract for North Sea Brent crude was down 93¢ to $67.81/bbl. The April gas oil contract lost $9.75 to $577.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes declined 14¢ to $63.73/bbl on Apr. 3.
Contact Sam Fletcher at [email protected]
