MARKET WATCHEnergy futures prices fall with increased US oil inventory

Sam Fletcher
Senior Writer

HOUSTON, Aug. 7 -- Energy futures prices fell Wednesday with government and industry reports of an increase in commercial US oil inventories, as the market continued to vacillate daily under conflicting influences.

The US Energy Information Administration said Wednesday that US oil stocks increased by 2.9 million bbl to 280.2 million bbl during the week ended Aug. 1. However, those stocks remain 24.1 million bbl below last year's level for the same period. US distillate inventories rose by 1.7 million bbl to 119.1 million bbl last week, primarily through an increase in heating oil, said EIA officials. However, US stocks of gasoline dropped by 2.7 million bbl to 201.8 million bbl, below the normal range for this time of year.

The American Petroleum Institute said US oil stocks were up by 1.6 million bbl to 278.1 million bbl in the week ended Aug. 1. It said gasoline inventories fell by 4.5 million bbl to 201.8 million bbl, while US distillate stocks increased by 417,000 bbl to 116.1 million bbl.

Energy prices
The September contract for benchmark US sweet, light crudes dropped 52¢ to $30.70/bbl Wednesday on the New York Mercantile Exchange, and the October position retreated by 45¢ to $31.46/bbl. Heating oil for September delivery lost 1.23¢ to 83.4¢/gal. Unleaded gasoline for the same month declined by 0.67¢ to 94.72¢/gal.

API said Wednesday that the average US retail price for all types of gasoline increased by 1.8¢/gal last week, averaging $1.58/gal as of Aug. 4. "Gasoline prices are now 19¢/gal less than when they peaked in mid-March at $1.77/gal, but still about 14¢/gal more than at this time last year," API officials said.

The September natural gas contract was up 6.8¢ to $4.75/Mcf Wednesday on NYMEX. Although that market benefited from "a slightly firmer cash market," said analysts Thursday at Enerfax Daily, "prices remained stuck in recent technical ranges, waiting for a reason to break out."

They said, "The weather is not bullish, but crude oil prices have helped underpin natural gas recently. With the latest Atlantic storm downgraded and much of the heat this week confined to Texas, there is likely only limited upside from here. Despite a busy start to the 2003 Atlantic hurricane season, experts expect below average storm activity in August and September."

EIA officials Thursday reported 74 bcf of natural gas was injected into US underground storage during the week ended Aug. 1. That was down from 83 bcf the previous week, up from 33 bcf during the same time last year, and below Wall Street's consensus for the latest period. US natural gas storage now exceeds 2.1 tcf, but it is still down from the same time a year ago and 234 bcf below the 5-year average.

In London, the September contract for North Sea Brent oil lost 45¢ to $29.48/bbl on the International Petroleum Exchange. The September natural gas contract dipped by 0.5¢ to the equivalent of $2.50/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes inched up by 8¢ to $28.88/bbl.

US crude imports averaged nearly 10.3 million b/d last week, up 210,000 b/d from the previous week, said EIA officials. Over the last 4 weeks, US oil imports have averaged almost 9.9 million b/d, up by 704,000 b/d from the same period a year ago.

Apparently no Iraqi crude was among last week's US imports, said EIA officials. The previous week for the first time since May, the US received shipments of Iraqi oil from storage in Turkey. Iraq currently is in the process of ramping up its oil production and has not yet resumed regular exports of crude.

Contact Sam Fletcher at [email protected]