Sam Fletcher
OGJ Senior Writer
HOUSTON, Sept. 15 -- Natural gas rose 0.7% Sept. 14 in the New York market “on surprisingly strong cash prices,” but oil dipped below $77/bbl as the discount of US benchmark crude to North Sea Brent widened and Enbridge Energy Partners LP announced progress on repairs of its 670,000 b/d 6A crude pipeline that was shut-in Sept. 9 due to a leak (OGJ Online, Sept. 14, 2010).
“The latest statements from Enbridge and local officials indicate that the line will be restarted earlier than priced by the market, and we will now not exclude a weekend surprise on the resumption of flows,” said Olivier Jakob at Petromatrix, Zug, Switzerland. “Overall, we feel comfortable with a maximum downtime of 14 days and given that some refineries in Petroleum Administration for Defense District 2 are starting their maintenance program, this will not result in any lasting supply deficit in the Midwest.” He said, “We still want to avoid the October West Texas Intermediate contract that expires [Sept. 21], but the November or December contract should give back most of their Enbridge premium.”
At Standard New York Securities Inc., part of the Standard Bank Group, analyst Walter de Wet said crude prices continued to track dollar movements “with renewed dollar weakness again pushing front-month WTI easily beyond the $75.50/bbl handle” in early trading Sept. 15. “We look to dollar fluctuations to continue their influence on oil prices into the afternoon. Rising equities continue to signal improving market sentiment, which could provide added support to oil prices,” he said.
Analysts in the Houston office of Raymond James & Associates Inc. said, “After posting 4 straight days of gains, the broader [equity] market ended the day down slightly as an encouraging retail sales report in the US wasn't enough to offset poor economic news from Europe.”
As for weather factors, Jakob noted, “Hurricanes Igor and Julia are not going to the US [sector of the] Gulf of Mexico. Tropical Storm Karl will pass over the Yucatan and could regain some strength to hurricane status when it reappears in the gulf, but that should not translate in anything more than some temporary delays in Mexican crude oil exports because of port closures.”
Raymond James analysts said, “With Category 4 Hurricane Igor still lurking in the Atlantic, followed closely by Julia, the forecasted ‘active hurricane season’ appears to really be picking up now that we've passed the midway point of the season. While each of the named hurricanes thus far in 2010 has taken a turn north before reaching the Caribbean (similar projections for the paths of Hurricanes Igor and Julia as well), oil and gas traders are sure to keep a close eye on storm activity developing in the Atlantic over the next month.”
In other news, the latest MasterCard Spending Pulse report showed retail gasoline at the pump fell 3.2% last week as Labor Day holiday travels were disrupted by bad weather on the East Coast. “It was the lowest level of gasoline sales since October 2008 and brings the 4-week average to 0.5% [higher than] last year,” Jakob reported.
US inventories
The Energy Information Administration said Sept. 15 commercial US crude inventories fell 2.5 million bbl to 357.4 million bbl in the week ended Sept. 10, matching exactly the Wall Street consensus. Gasoline stocks dropped 700,000 bbl to 224.5 million bbl, compared with market expectations for a 600,000 bbl decline. Both finished gasoline inventories and blending components were down. Distillate fuel inventories declined 300,000 bbl to 174.5 million bbl, counter to a consensus for a 600,000 bbl increase.
Imports of crude into the US increased 142,000 b/d to 9 million b/d during the same week. In the 4 weeks through Sept. 10, US crude imports averaged 9.4 million b/d, up 168,000 b/d from the comparable 4-week period a year ago. Total gasoline imports last week averaged 644,000 b/d while distillate fuel imports averaged 194,000 b/d.
The input of crude into US refineries increased 94,000 b/d to 15 million b/d last week with units operating at 87.6% of capacity. Gasoline production decreased to 9.2 million b/d as distillate fuel production increased to 4.4 million b/d.
Energy prices
The October contract for benchmark US light, sweet crudes dropped 39¢ to $76.80/bbl Sept. 14 on the New York Mercantile Exchange. The November contract fell 20¢ to $77.83/bbl. On the US spot market, WTI at Cushing, Okla., was down 39¢ to $76.80/bbl. Heating oil for October delivery continued climbing, up 0.61¢ to $2.13/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month, however, declined 1.16¢ to $1.97/gal.
The October natural gas contract increased 2.8¢ to $3.97/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., jumped 12¢ to $4.01/MMbtu.
In London, the October IPE contract for North Sea Brent crude gained 13¢ to $79.16/bbl. Gas oil for October advanced $3 to $677.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes was up 48¢ to $75.54/bbl.
Contact Sam Fletcher at [email protected].
Rystad Energy.
