Sam Fletcher
OGJ Senior Writer
HOUSTON, Mar. 10 -- Oil and gas prices declined Mar. 9 under the weight of a stronger dollar, but crude still settled above $80/bbl for the fifth consecutive session in the New York market.
“The drop came despite the Energy Information Administration increasing its US consumption forecast for 2010 from 1.2 million b/d to 1.5 million b/d,” said analysts in the Houston office of Raymond James & Associates Inc. EIA also predicted crude will average $80/bbl this spring, rising to $82/bbl by yearend 2010 and $85/bbl by yearend 2011.
Raymond James analysts said, “Natural gas prices lost a penny and have continued to hover around the $4.50/Mcf mark for the past several days. The broader market gave another lackluster performance, trading relatively flat on the day while energy stocks traded mixed but relatively unchanged as well.” Gas was priced below $4.50/Mcf in early trading Mar. 10 while oil rallied slightly, they said.
Olivier Jakob at Swiss-based Petromatrix said, “With the US weather relatively mild, natural gas continues to gently drift lower and will be facing a test of support at $4.40/MMbtu.” North Sea Brent “could not hold to $80/bbl yesterday and that level will need to be monitored today on a closing basis,” he said.
In New Orleans, analysts at Pritchard Capital Partners LLC said concerns the Greek financial crisis will trigger a default on debts by other European countries helped push the dollar higher against euro. They noted the EIA’s short term natural gas report on Mar. 9 was neutral, “pointing at both a slight decrease in natural gas supplies this year due to lag time arising from low drilling rates in 2009 and a possibility of higher-than-expected production due to increasing drilling efficiencies.” Pritchard Capital Partners said, “Due to the lack of weather-driven support, we believe that the market remains in bearish territory.”
US inventories
The EIA said Mar. 10 commercial US crude inventories increased by 1.4 million bbl to 343 million bbl in the week ended Mar. 5. That was less than the 2 million bbl increase anticipated on Wall Street. Gasoline inventories fell 2.9 million bbl to 229 million bbl, while the Wall Street consensus was for no change. Distillate fuel inventories decreased by 2.2 million bbl to 149.6 million bbl, more than the expected 1 million bbl decline.
Imports of crude into the US fell 744,000 b/d to 8.5 million b/d last week. In the 4 weeks through Mar. 5, crude imports averaged 8.8 million b/d, down 367,000 b/d from the comparable period in 2009.
The input of crude into US refineries dropped 149,000 b/d to 13.9 million b/d in the latest week with units operating at 80.7% of capacity. Gasoline production decreased to 8.8 million b/d, and distillate fuel production declined to 3.7 million b/d.
The American Petroleum Institute earlier reported a large jump in crude inventory, up 6.5 million bbl to 343.6 million bbl in the week ended Mar. 5. It said gasoline stocks fell 3.2 million bbl to 229.7 million bbl. It reported distillate stocks were down 2.8 million bbl to 151.8 million bbl, and US refineries dipped to 80.9% of capacity.
Energy prices
The April contract for benchmark US light, sweet crudes dropped 38¢ to $81.49/bbl Mar. 9 on the New York Mercantile Exchange. The May contract fell 45¢ to $81.86/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 38¢ to $81.49/bbl. Heating oil for April delivery declined 1.57¢ to $2.09/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month decreased 2.89¢ to $2.26/gal.
The April natural gas contract lost 1.1¢ to $4.52/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 5.5¢ to $4.53/MMbtu.
In London, the April IPE contract for North Sea Brent crude dropped 56¢ to $79.91/bbl. Gas oil for March increased $1 to $650.25/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 reference crudes lost 48¢ to $77.38/bbl.
OPEC said its reference basket fell $3.02 to an average $72.99/bbl in February, primarily because of growing concern about the economic recovery triggered by sovereign debt issues in the euro-zone, particularly in Greece. “However, market sentiment changed recently amid more positive economic data and rising equities, which provide support for crude prices as well,” said OPEC officials (OGJ Online, Mar. 10, 2009).
Contact Sam Fletcher at samf@ogjonline.com.
