Sam Fletcher
Senior Writer
HOUSTON, Apr. 18 -- Energy prices continued falling Apr. 17 after Valero Energy Corp. said its 158,000 b/d McKee refinery in Sunray, Tex., was partially back in operation, following a Feb. 16 propane fire that forced its shutdown.
Valero officials said they expected the facility to achieve 85,000 b/d of throughput by the end of this month (OGJ Online, Apr. 17, 2007). "Refinery shutdowns have led to a buildup in crude oil reserves and depressed the price of West Texas Intermediate relative to other light sweet crudes," said analysts in the Houston office of Raymond James & Associates Inc.
Enbridge Inc. in Calgary said it might resume pumping crude Apr. 18 through its 490,000 b/d pipeline that is the main route for Canadian crude to US Midwest refineries. "It was only after market hours that Enbridge publicly confirmed the restart of the Canadian pipeline for later today, and this could lead to less short covering on the WTI time spreads," said Olivier Jacob, managing director of Petromatrix GMBH, Zug, Switzerland. Enbridge shut in part of that pipeline following an Apr. 15 release of heavy crude.
Meanwhile, the dollar index continues under heavy pressure, with the US dollar at a 26-year low to sterling. "The low dollar has so far not provided any evident support to the rest of the commodities. It will however be on top of minds of [Organization of Petroleum Exporting Countries] members and will further complicate [production ratio] compliance management," Jacob said.
In other news, opposition parties in Nigeria claim that vote-rigging was widespread in local elections over the weekend and called for postponement of the presidential election set for Apr. 21. "The continued uncertainty in the political situation illustrates the risk premium in oil prices," Raymond James analysts said.
US Inventories
The Energy Information Administration said Apr. 18 that US gasoline inventories fell for the 10th consecutive week, dropping 2.7 million bbl to 197 million bbl in the week ended Apr. 13. That puts US gasoline stocks below average just weeks before the start of the summer driving season. Commercial US crude inventories dropped 1 million bbl to 332.4 million bbl during the same period. Distillate fuel stocks declined by 800,000 bbl to 117.3 million bbl, with both heating oil and diesel fuel down. Propane and propylene inventories rose by 200,000 bbl to 26 million bbl last week.
Imports of crude into the US increased by 115,000 b/d to 9.9 million b/d during the same week. Total gasoline imports topped 1 million b/d. The input of crude into US refineries increased by 372,000 b/d to 15.4 million b/d, with units operating at 90.4 % of production capacity. Gasoline production increased to 8.7 million b/d while distillate production declined to 4.2 million b/d.
Energy prices
The May contract for benchmark US light, sweet crudes dropped 51¢ to $63.10/bbl on Apr. 17 at the New York Mercantile Exchange. The June contract fell $1.21 to $64.46/bbl. On the US spot market, WTI at Cushing, Okla., lost 74¢ to $63.11/bbl. Heating oil for May delivery retreated by 6.15¢ to $1.80/gal on NYMEX. The May contract for reformulated blend stock for oxygenate blending (RBOB) declined by 5.99¢ to $2.06/gal.
The May natural gas contract dropped 11.2¢ to $7.42/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 17¢ to $7.47/MMbtu. "After an unexpected bout of colder temperatures, the forecast for more moderate weather has driven natural gas futures down to...almost a 2-week low," said Raymond James analysts. "After a recent cold snap, above-average temperatures are expected to cover the eastern half of the US Apr. 22-30, according to government meteorologists at the Climate Prediction Center. Specifically, demand for heat in the Northeast is expected to drop from 87% above normal to 25% below average on Apr. 22," said Raymond James analysts.
In London, the June IPE contract for North Sea Brent crude dropped $1.32 to $65.93/bbl. The May gas oil contract lost $5.75 to $585.75/tonne.
The average price for OPEC's basket of 11 benchmark crudes fell by 94¢ to $62.99/bbl on Apr. 17.
Contact Sam Fletcher at [email protected].
