MARKET WATCHCrude futures give back some of price gain

Following reports of a build in commercial US inventories, crude futures prices retreated June 2, flattening some of the previous session's spike.

June 3, 2005

2 min read

By OGJ editors

HOUSTON, June 3 -- Following reports of a build in commercial US inventories, crude futures prices retreated June 2, flattening some of the previous session's spike.

The Energy Information Administration reported crude inventories increased by 1.4 million bbl to 333.8 million bbl during the week ended May 27 (OGJ Online, June 2, 2005). Gasoline stocks increased by 1.3 million bbl to 216.7 million bbl during the same period. Distillate fuel stocks gained by 700,000 bbl to 106.4 million bbl.

The July contract for benchmark US light, sweet crudes fell by 97¢ to $53.63/bbl June 2 on the New York Mercantile Exchange. The August contract retreated by 80¢ to $54.62/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., lost 97¢ to $53.64/bbl. Gasoline for July delivery dropped 2.88¢ to $1.52/gal on NYMEX. However, heating oil for the same month inched up by 0.22¢ to $1.5422/gal.

The July natural gas contract gained 3¢ to $6.82/MMbtu, "buoyed by a strong heating oil market," said analysts at Enerfax Daily. "As long as heating oil keeps going up, so will natural gas," they said.

The market was helped by the EIA's May 2 report that 86 bcf of natural gas was injected into US underground storage in the week ended May 27. That was down from injections of 93 bcf the previous week and 87 bcf during the same period in 2004. US gas storage now stands at nearly 1.8 tcf of gas, up by 226 bcf from a year ago and 304 bcf above the 5-year average.

In London, the July contract for North Sea Brent crude lost 87¢ to $52.40/bbl on the International Petroleum Exchange.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes jumped by 93¢ to $50.23/bbl on June 2.