MARKET WATCH: Crude prices fall for fourth session

Dec. 19, 2007
Crude futures prices fell in the fourth consecutive trading session Dec. 18 as Turkish troops began withdrawing from northern Iraq.

Sam Fletcher
Senior Writer

HOUSTON, Dec. 19 -- Crude futures prices fell in the fourth consecutive trading session Dec. 18 as Turkish troops began withdrawing from northern Iraq.

Earlier the January contract for benchmark US light, sweet crudes climbed to $92.88/bbl in electronic trading in New York on reports of attacks by Turkish aircraft and hundreds of Turkish troops against the Kurdistan Workers Party in northern Iraq, sparking market fears of damage to an oil pipeline from Iraq to a Turkish export facility on the Mediterranean. It was the first major troop deployment by Turkey into Iraq and raised questions of prior US knowledge and approval (OGJ Online, Dec. 18, 2007).

The New York market "returned to the corrective patterns for the expiry of the January crude contract" with "Turkish soldiers returning home and French workers returning to the refineries," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. "We remain however in preholiday mood, and West Texas Intermediate is trading around simple support and resistance lines." He said, "The dollar index will remain a leading indicator for trading oil in the last days of 2007."

US inventories
During the Dec. 18 session, traders anticipated a recent draw of 1.4 million bbl in crude from US storage. Instead the Energy Information Administration said Dec. 19 that commercial US crude inventories fell 7.6 million bbl to 296.9 million bbl during the week ended Dec. 14.

Gasoline stocks grew by 3 million bbl to 205.2 million bbl vs. a consensus increase of 800,000 bbl during that week. Distillate fuel inventories dropped 2.1 million bbl to 129.4 million bbl during the same period, while the market was expecting a decrease of 400,000 bbl. Propane and propylene inventories decreased by 1.7 million bbl to 57.9 million bbl last week.

Imports of crude into the US fell by 952,000 b/d to 9.1 million b/d during that same period. The input of crude into US refineries dipped 38,000 b/d to 15.2 million b/d, with refineries operating at 87.8% of capacity in the week ended Dec. 14. Gasoline production declined to 9.1 million b/d, while distillate fuel production rose to 4.3 million b/d.

Energy prices
The expiring January contract for benchmark US crudes closed at $90.49/bbl, down 14¢ for Dec. 18 on the New York Mercantile Exchange. The new front-month February contract lost 97¢ to $90.08/bbl. On the US spot market, WTI at Cushing, Okla., was down 14¢ to $90.50/bbl. Heating oil for January lost 4.25¢ to $2.56/gal on NYMEX. The January contract for reformulated blend stock for oxygenate blending (RBOB) dropped 3.11¢ to $2.30/gal.

However, the January natural gas contract gained 10.6¢ to $7.14/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was up 7¢ to $7.16/MMbtu.

In London, the February IPE contract for North Sea Brent crude dropped $1.17 to $90.12/bbl. Gas oil for January lost $3 to $811.75/tonne.

The Organization of Petroleum Exporting Countries' Vienna office was closed Dec. 19 for Eid Al-Adha, an important Muslim feast concluding the pilgrimage to Mecca, so no report on OPEC's basket price was available.

Contact Sam Fletcher at [email protected]