MARKET WATCHEnergy prices rebound with inventory surprises

Sept. 15, 2005
Energy prices rebounded Sept. 14 with government reports that US crude inventories fell and gasoline stocks rose more than traders had expected.

Sam Fletcher
Senior Writer

HOUSTON, Sept. 15 -- Energy prices rebounded Sept. 14 with government reports that US crude inventories fell and gasoline stocks rose more than traders had expected.

The US Energy Information Administration said commercial US crude stocks plummeted by 6.6 million bbl to 308.4 million bbl during the week ended Sept. 9, while gasoline stocks jumped by 1.9 million bbl to 192 million bbl (OGJ Online, Sept. 14, 2005). Distillate fuel inventories fell by 1.1 million bbl to 133.3 million bbl in the same period.

Industry status
Meanwhile, the US Minerals Management Service said 2 rigs and 84 offshore platforms remained unmanned in the Gulf of Mexico as of Sept. 14 because of Hurricane Katrina 2 weeks earlier. Offshore production was still reduced by 843,725 b/d of crude and 3.518 bcfd of natural gas. That amounts to 56.3% of normal crude production and 35.2% of usual natural gas production from those waters. Cumulative production from the gulf lost to Hurricane Katrina since Aug. 26 totals 20.5 million bbl of crude and 99 bcf of natural gas.

EIA officials said five Gulf Coast refineries remain shut down, including Chevron Corp.'s 325,000 b/d unit in Pascagoula, Miss.; ConocoPhillips' 247,000 b/d facility at Belle Chasse, La.; ExxonMobil Corp.'s 187,000 b/d Chalmette, La., refinery; Murphy Oil Corp.'s 125,000 b/d refinery at Meraux, La.; and Shell Chemical LP's 55,000 b/d refinery at St. Rose, La. The first four of those refineries, representing 5% of total US refining capacity, could be shut down for an extended period, officials said. The Shell Chemical distillation capacity at St. Rose has been awaiting restart the Motiva Enterprises LLC 226,500 b/d Norco refinery, now operating at 95% of capacity.

El Paso Corp. reported damage to both its Tennessee Gas Pipeline and Southern Natural Gas systems that affects a total 1.25 bcfd in capacity. EIA said, "Approximately 3 bcfd was initially shut in on El Paso's three natural gas pipeline systems in the Gulf of Mexico as a result of Hurricane Katrina. Currently, there are 700 MMcfd of production shut in on Tennessee Gas Pipeline and 550 MMcfd on Southern Natural Gas (SNG). ANR Pipeline has returned to full capacity."

EIA said the Louisiana Offshore Oil Port is expected to be at 100% of capacity by the end of this week, after Port Fourchon, La., becomes operational. More than 10% of the nation's imported crude comes in through LOOP.

Energy prices
The October contract for benchmark US sweet, light crudes jumped by $1.98 to $65.09/bbl Sept. 14 on the New York Mercantile Exchange as bargain-hunters returned to the market after the sell-off in six of the last seven trading sessions. The November contract gained $1.95 to $65.73/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., increased by $1.98 to $65.10/bbl. Heating oil for October delivery escalated by 8.47¢ to $1.92/gal on NYMEX. Gasoline for the same month bumped up by 4.58¢ to $1.94/gal.

The October natural gas contract shot up by 40.3¢ to $11.17/MMbtu on NYMEX, tracking the rebound in crude prices. On Sept. 15, EIA reported the injection of 89 bcf of natural gas in US underground storage in the week ended Sept. 9. That compares with injections of 36 bcf the previous week and 99 bcf in the same period a year ago.

US gas storage now stands at 2.8 tcf, down by 102 bcf from year-ago levels but up by 98 bcf from the 5-year average.

In London, the October contract for North Sea Brent crude rose by $1.76 to $63.37/bbl on the International Petroleum Exchange. October gas oil increased by $15.75 to $591/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes gained 46¢ to $56.28/bbl.

Contact Sam Fletcher at [email protected].