Sam Fletcher
OGJ Senior Writer
HOUSTON, Apr. 28 -- Energy prices fell Apr. 27 in the New York market following the tumbling equity market after Standard & Poor's dropped Greece's credit rating to junk status and downgraded Portugal's debt rating.
S&P lowered Greece’s rating to BB+ from BBB+ and reduced Portugal to A- from A+. That “sent the equity markets plummeting as the S&P 500 fell over 2% during the session,” said analysts in the Houston office of Raymond James & Associates Inc. “The energy markets slid even further into the red—the Oil Service Index was down 4% with the [S&P] E&P index down 3%—as oil prices dropped 2% on the day. The dollar posted its largest gain against the euro in over a year,” they said.
However, the euro recovered in early trading Apr. 28 when Germany said it could approve a financial bailout for Greece in early May.
Olivier Jakob at Petromatrix in Zug, Switzerland, reported, “There was an early attempt to drive West Texas Intermediate higher” on Apr. 27 but was interrupted by S&P’s actions. “Risk aversion was then back to the trading floors, with the dollar index rising, the volatility index surging, the Dow Jones Industrial Average falling, and a general rout on commodities (apart from gold of course),” he said.
Jakob said, “The MasterCard [Spending Pulse] report is indicating [US] gasoline sales at the pump down 2.7% on the week and only up 0.4% on the 4-week average vs. last year. The only time we had lower gasoline sales this year was in early February when ‘Snowmaggeddon’ brought the Eastern US to a halt.”
US inventories
The Energy Information Administration said Apr. 28 commercial US inventories of crude increased 1.9 million bbl to 357.8 million bbl in the week ended Apr. 23. That compared with a Wall Street consensus for a 1.1 million bbl increase. Gasoline stocks fell 1.2 million bbl to 223.7 million bbl, thwarting expectations of an 800,000 bbl gain. Distillate fuel inventories gained 2.9 million bbl to 151.8 million bbl, exceeding a consensus for a build of 1.5 million bbl, EIA said.
The American Petroleum Institute earlier reported a jump in US crude stocks of 5.3 million bbl to 360.4 million bbl in that same week, with gasoline inventories down 658,000 bbl to 219.4 million bbl. Distillates dipped 68,000 bbl to 145.5 million bbl, API said.
Imports of crude into the US in that period increased by 68,000 b/d to 9.7 million b/d, said EIA officials. In the 4 weeks through Apr. 23, crude imports increased 170,000 b/d to 9.4 million b/d from the comparable period in 2009.
Input of crude into US refineries was up by 278,000 b/d to 15 million b/d with units operating at 89% of capacity in the latest week—“the highest utilization rate since July 2008,” said Jacques H. Rousseau, an analyst at Soleil-Back Bay Research. Gasoline production decreased to 9.2 million b/d, while distillate fuel production increased to 4.2 million b/d, EIA reported.
Rousseau said, “The increases to distillate and jet fuel (up 1.6 million bbl) inventories more than offset a decline to gasoline stocks, a negative for refiners. Coupled with [rising] utilization rates…we expect increased production and rising inventories in the coming weeks.”
Energy prices
The June contract for benchmark US light, sweet crudes dropped $1.76 to $82.44/bbl Apr. 27 on the New York Mercantile Exchange. The July contract fell $1.47 to $85/bbl. Heating oil for May delivery declined 0.68¢ to $2.23/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month was down 1.41¢ to $2.33/gal.
The May natural gas contract lost 4.6¢ to $4.22/MMbtu, ending a three-session rally on NYMEX. On the US spot market, gas at Henry Hub, La., gained 4.5¢ to $4.23/MMbtu.
In London, the June IPE contract for North Sea Brent crude dropped $1.05 to $85.78/bbl. Gas oil for May dipped 50¢ to $719/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 reference crudes lost 88¢ to $83.03/bbl.
Contact Sam Fletcher at [email protected].
Rystad Energy.
