Sam Fletcher
Senior Writer
HOUSTON, May 17 -- Front-month crude prices dropped back below $63/bbl May 16 on the New York market as protestors in Nigeria ended their occupation of a major hub on the Trans-Niger pipeline that had forced Royal Dutch Shell PLC to cut crude production by 170,000 b/d.
Civil unrest in Nigeria has disrupted some 900,000 b/d of crude shipments from the world's eighth largest oil exporter (OGJ Online, May 16. 2007).
However, analysts at Barclays Capital Commodities Research, London, said refinery problems negated the US Energy Information Administration's report of a higher-than-expected build of gasoline inventories as a result of soaring gasoline imports during the week ended May 11.
"The latest spate of refinery problems involved news that BP [PLC] might delay by a week the restart of a 52,000 [b/d] gasoline-making unit at its Toledo refinery in Ohio, ConocoPhillips's announcement that it had shut one of three crude units at its 194,000 b/d refinery in Ponca City, Okla., ahead of scheduled turnaround for late May, and that some units at its Sweeny refinery in Texas were operating at reduced rates. News earlier in the day that Valero [Energy Corp.] is set to lose 64,000 b/d gasoline production at its Houston refinery for about a week also contributed to the positive tone of trading."
Energy prices
The June contract for benchmark US light, sweet crudes dropped 62¢ to $62.55/bbl May 16 on the New York Mercantile Exchange. The July contract lost 65¢ to $63.95/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 62¢ to $62.56/bbl. Heating oil for June delivery lost 2.32¢ to $1.87/gal on NYMEX. The June contract for reformulated blend stock for oxygenate blending (RBOB) continued to climb, however, up 3.54¢ to $2.34/gal.
The June natural gas contract increased by 2.6¢ to $7.89/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., declined by 3¢ to $7.61/MMbtu. "Along with the usual volatility felt during the shoulder season, the continued influx of liquefied natural gas imports and declining year-over-year liquids stripping (which removes less gas from the stream) should play a part in [the latest] injection number," said analysts in the Houston office of Raymond James & Associates Inc.
The EIA reported May 17 the injection of 95 bcf of natural gas into US underground storage in the week ended May 11. That was within the consensus of Wall Street analysts and compared with injections of 96 bcf the prior week and 91 bcf during the same period a year ago. US gas storage now exceeds 1.8 tcf, down 225 bcf from a year ago but 315 bcf above the 5-year average.
In London, the expiring June IPE contract for North Sea Brent crude dropped 10¢ to $68.01/bbl. The June gas oil contract fell by $4.75 to $588.50/tonne.
The Organization of Petroleum Exporting Countries' Vienna office closed May 17 for a public holiday, so there was no update of the average price for OPEC's basket of 11 benchmark crudes.
Contact Sam Fletcher at [email protected].
