Oil prices fell with front-month crude down 0.6% in the New York futures market May 21 as the US dollar rallied in expectation the Federal Reserve Bank would maintain current efforts to stimulate the national economy.
Indeed, Fed Chairman Ben Bernanke told Congress May 22 it is too soon to change policy with the job market still weak and unemployment still too high at 7.5%, despite moderate growth of the economy.
Energy stocks slipped, with the Oil Service Index and the SIG Oil Exploration & Production Index down 0.3% and 0.5%, respectively. Broader markets remained flat.
Oil prices continued declining in early trading May 22 with West Texas Intermediate dropping below $96/bbl and North Sea Brent “edging lower towards the $103/bbl level,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “As for the rest of the commodities,” he said, “oil markets are held captive by positioning and uncertainty” ahead of Bernanke’s afternoon testimony before the Congressional Joint Economic Committee.
US inventories
The Energy Information Administration said May 22 commercial US crude inventories declined 300,000 bbl to 394.6 million bbl in the week ended May 17, short of the Wall Street consensus for a 1 million bbl draw. Gasoline stocks jumped by 3 million bbl to 220.7 million bbl in the same period, compared with analysts’ expectations of a 300,000 bbl decrease. Both finished gasoline inventories and blending components increased. Distillate fuel inventories fell 1.1 million bbl to 118.8 million bbl, opposite the market outlook for a 1 million bbl build.
Imports of crude into the US escalated by 507,000 b/d to 8.1 million b/d last week. In the 4 weeks through May 17, US crude imports averaged 7.9 million b/d, down 932,000 b/d from the comparable period a year ago. Gasoline imports last week averaged 1.1 million b/d, while distillate fuel imports averaged 101,000 b/d.
The input of crude into US refineries decreased 4,000 b/d to 15.2 million b/d last week with units operating at 87.3% of capacity. Gasoline production increased above 9.2 million b/d; distillate fuel production increased to 4.8 million b/d.
Energy prices
The June contract for benchmark US light, sweet crudes dropped 55¢ to $96.16/bbl May 20 on the New York Mercantile Exchange. The July contract fell 75¢ to $96.18/bbl. On the US spot market, WTI at Cushing, Okla., was down 45¢, back in step with the front-month futures contract at $96.16/bbl at closing.
Heating oil for June delivery declined 2.18¢ to $2.93/gal on NYMEX. Reformulated stock for oxygenate blending for the same month decreased 5.98¢ to $2.85/gal.
The June natural gas contract continued climbing, up 10.2¢ to $4.19/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., regained 3.5¢ to $4.14/MMbtu.
In London, the July IPE contract for Brent lost 89¢ to $103.91/bbl. Gas oil for June fell $7.25 to $875.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was down 56¢ to $101.39/bbl.
Contact Sam Fletcher at [email protected].
