MARKET WATCH: NYMEX oil prices continue to fall on rise in US inventory

Jan. 14, 2015
Prices for US light, sweet crude oil fell modestly on the New York market Jan. 13, reaching the lowest front-month price since April 2009 while Brent crude oil for February delivery closed at less than $47/bbl—Brent’s lowest settlement since March 2009—on the London market on Jan. 13.

Prices for US light, sweet crude oil fell modestly on the New York market Jan. 13, reaching the lowest front-month price since April 2009 while Brent crude oil for February delivery closed at less than $47/bbl—Brent’s lowest settlement since March 2009—on the London market on Jan. 13.

Hans van Cleef of ABN AMRO said he expects to see an oil-price recovery starting this year. He forecast an average 2015 price for US light, sweet crude oil of $55/bbl and an average Brent price of $60/bbl.

For 2016, van Cleef forecast an average US light, sweet crude price of $70/bbl and Brent of $75/bbl.

“The oil price decline went too far and too fast,” van Cleef said in a research note. “The first signs for a possible upward price recovery are already emerging. The market, however, is ignoring them.”

He believes a price recovery will stem from various factors that will reduce abundant worldwide oil supply. These factors include delays of new, expensive oil process and an anticipated decline in US oil production given the dropping rig count.

Meanwhile, a weekly government petroleum status report showed another gain in US oil supplies.

Inventory at 80-year high

The Energy Information Administration on Jan. 14 said US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased by 5.4 million bbl for the week ended Jan. 9 from the previous week.

At 387.8 million bbl, US crude inventories are at the highest level in at least 80 years for this time of year.

Total motor gasoline inventories increased by 3.2 million bbl, which is well above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week.

Distillate fuel inventories increased by 2.9 million bbl last week but are in the lower half of the average range for this time of year. Propane-propylene inventories fell 800,000 bbl last week but are well above the upper limit of the average range, EIA said.

US refinery inputs averaged 15.9 million b/d for the week ended Jan. 9, which was 527,000 b/d less than the previous week’s average. Refineries operated at 91% of capacity last week.

Gasoline production increased last week, averaging more than 9.1 million b/d. Distillate fuel production decreased last week, averaging 5.1 million b/d.

US crude oil imports averaged 7.5 million b/d last week, up by 636,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged more than 7.4 million b/d, which was 0.6% below the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 512,000 b/d while distillate fuel imports averaged 232,000 b/d last week.

Energy prices

The NYMEX February crude oil contract declined 18¢ on Jan. 13, closing at $45.89/bbl. The March contract dropped 25¢ to $46.51/bbl.

The natural gas contract for February rose a rounded 15¢ to $2.94/MMbtu. The cash gas price at Henry Hub, La., fell 1¢ to $2.89/MMbtu on Jan. 13.

Heating oil for February was down 2¢ to a rounded $1.63/gal. Reformulated gasoline stock for oxygenate blending for February less than a penny to remain at a rounded $1.27/gal.

The February ICE contract for Brent crude oil dropped 84¢ to settle at $46.59/bbl although Brent briefly dipped to as low at $45.19/bbl and at one point traded below NYMEX crude. Brent crude oil typically is higher than NYMEX crude oil.

The March contract fell 88¢ to $47.82/bbl. The ICE gas oil contract for January was down $13.25 to at $458.25/tonne.

The average price for OPEC’s basket of 12 benchmark crudes on Jan. 13 was $41.50/bbl, down $2.05 from the previous day.

Contact Paula Dittrick at [email protected].

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.