MARKET WATCH: NYMEX rises more than $1/bbl before inventory report

Jan. 22, 2015
Oil prices rose by more than $1/bbl on the New York market Jan. 21 while traders awaited a weekly government report on US oil and product inventories as well as the European Central Bank meeting where ECB announced an economic stimulus for Europe as had been expected.

Oil prices rose by more than $1/bbl on the New York market Jan. 21 while traders awaited a weekly government report on US oil and product inventories as well as the European Central Bank meeting where ECB announced an economic stimulus for Europe as had been expected.

The US Energy Information Administration released its petroleum status report 1 day later than normal this week because of the Jan. 19 holiday in the US honoring Martin Luther King Jr.

US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased by 10.1 million bbl for the week ended Jan. 16 compared with the previous week. EIA estimated the total at 397.9 million bbl.

Before the report was released, analysts had told the Wall Street Journal they expected crude supplies would show a rise of 2.7 million bbl.

The ECB on Jan. 22 announced it will purchase eurozone countries’ government bonds in a move to combat economic stagnation. ECB Pres. Mario Draghi said the ECB will buy €60 billion/month in government bonds and debt securities issued by European institutions, starting in March and running through September 2016.

Separately, the Bank of Canada surprised oil traders on Jan. 21 by announcing an interest-rate cut and lowering its economic growth forecast for the first half of 2015 to 1.5%, citing falling oil prices. Canada had been widely expected to hold rates steady, and the cut was the first since April 2009.

Oil trades in dollars, and oil prices are influenced by a combination of factors. Changes in currency rates influence the market’s expectations of future nominal oil prices.

Gasoline inventories climb

Total US motor gasoline inventories increased by 600,000 bbl for the week ended Jan. 16, which EIA said was well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week.

Distillate fuel inventories decreased by 3.3 million bbl and are in the lower half of the average range for this time of year. Propane-propylene inventories fell 3.6 million bbl but are well above the upper limit of the average range, EIA said.

US refinery inputs averaged 14.9 million b/d during the week ended Jan. 16, which was 984,000 b/d less than the previous week’s average. Refineries operated at 85.5% of capacity.

Gasoline production increased last week, averaging over 9.2 million b/d. Distillate fuel production decreased last week, averaging about 4.8 million b/d.

US crude oil imports averaged over 7.2 million b/d last week, down by 274,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged about 7.2 million b/d, which was 4.2% below the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 683,000 b/d. Distillate fuel imports averaged 268,000 b/d.

Energy prices

The NYMEX March crude oil contract rose $1.31 on Jan. 21, closing at $47.78/bbl. The April contract climbed $1.26 to $48.43/bbl.

The natural gas contract for February was up 14¢ to a rounded $2.97/MMbtu. The cash gas price at Henry Hub, La., was $2.94/MMbtu on Jan. 21, up 2¢.

Heating oil for February rose nearly 2¢ to a rounded $1.64/gal. Reformulated gasoline stock for oxygenate blending for February was up 1¢ to a rounded $1.32/gal.

The March ICE contract for Brent crude oil climbed $1.04 to settle at $49.03/bbl. The April contract rose $1 to $50.16/bbl. The ICE gas oil contract for February was down $3.75 to $470.50/tonne.

The average price for OPEC’s basket of 12 benchmark crudes on Jan. 21 was $43.25, up 21¢ from the previous day.

Contact Paula Dittrick at [email protected].

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