Sam Fletcher
Senior Writer
HOUSTON, May 1 -- Crude prices declined Apr. 30, giving up some of the previous session's gains as market excitement cooled after the arrest of 172 militants accused of plotting attacks on Saudi Arabian oil installations.
The front-month contract for reformulated blend stock for oxygenate blending (RBOB) jumped, however, as traders worried about low US inventories of gasoline just weeks ahead of the Memorial Day holiday May 28 that marks the unofficial start of the summer driving season. That is "further confirmation that gasoline stays a trading island and crude does not manage to break the strong resistance," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland.
Analysts in the Houston office of Raymond James & Associates Inc. said, "Current fears of local [crude] supply builds due to refinery breakdowns have resulted in slightly lower crude prices in pre-market trading [on May 1]. This past week, crude supplies rose by 1.5 million bbl."
They reported May 1, "In another example of the rising geopolitical risk to the global oil market, Nigerian militants attacked a Chevron vessel off the coast of Nigeria and kidnapped six workers. This news comes on the heels of last week's reported terrorist plot in Saudi Arabia."
Jakob said, "Some political protests are planned [May 1] in Nigeria but what matters for the price of oil is interruption to [production] flows rather than tear gas and street beatings. For now the militants have stayed quiet on the political front but further kidnappings [are] a reminder of how insecure the oil region remains."
In other news, Jakob reported, "Discussions between unions and refiners are restarting in Belgium, which will lower the risk of strike." In a wage dispute, refinery workers in Belgium earlier were threatening a strike in May that would shut down four refineries with a combined capacity of more than 600,000 b/d (OGJ Online, Apr. 24, 2007).
"The dollar index remains under pressure and momentum across the commodity class continues to be slow. It is not only crude oil that is suffering from an investment deficit," Jakob said.
Energy prices
The June contract for benchmark US sweet, light crudes dropped 75¢ to $65.71/bbl Apr. 30 on the New York Mercantile Exchange. The July contract lost 63¢ to $67.21/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 76¢ to $65.71/bbl. Heating oil for May delivery was unchanged at $1.91/gal on NYMEX. But RBOB for the same month jumped again, up 7.92¢ to $2.44/gal.
The June natural gas contract gained 3.2¢ to $7.68/MMbtu on NYMEX. On the US spot market, natural gas at Henry Hub, La., escalated by 27¢ to $7.70/MMbtu.
In London, the June IPE contract for North Sea Brent crude traded at $67.45-68.44/bbl Apr. 30 before closing at $67.65/bbl, down 76¢ for the day. "We are getting extremely repetitive in our comments but we still continue to count and it is the 16th day out of the last 21 that Brent crude oil has traded above $68/bbl without being able to settle above $69/bbl," said Jakob.
The Vienna office of the Organization of Petroleum Exporting Countries was closed for a public holiday May 1, so no update of the OPEC basket price was available.
Contact Sam Fletcher at [email protected].
