Sam Fletcher
Senior Writer
HOUSTON, Sept. 10 -- Energy futures prices increased Tuesday, led by a surge in gasoline futures on the New York Mercantile Exchange as traders bet that government and industry reports on US inventories, due out Wednesday, would be bullish.
Early Wednesday, the US Energy Information Administration reported that US inventories of gasoline increased by 700,000 bbl to 192.6 million bbl during the week ended Sept. 5. US gasoline demand has averaged 9.3 million b/d over the last 4 weeks, up by 0.9% from the same period last year, EIA reported. Total gasoline imports into the US averaged 921,000 b/d last week, down from nearly 1.2 million b/d the previous week, which EIA said was "the second highest weekly average ever" (OGJ Online, Sept. 4, 2003).
Commercial US inventories of crude plunged by 4.2 million bbl to 276.2 million bbl last week, wiping out the prior week's 1.8 million bbl gain, EIA reported. Those stocks are now down by 5.7% from year-ago levels. US crude imports, including some from Iraq, averaged more than 9.6 million b/d last week, down by 478,000 b/d from the previous week.
US distillate stocks rose by 3.7 million bbl to 128.4 million bbl last week, with most of the increase in diesel fuel. US demand has been down 4% for distillate fuel and 3.4% for jet fuel over the last 4 weeks, compared with the same period last year.
Low OECD stocks
Meanwhile, the International Energy Agency in Paris said Wednesday that industry oil inventories among members of the Organization for Economic Cooperation and Development, including the US, "are heading into the winter heating season at the bottom of their 5-year range. Despite a recent build in product stocks, crude oil stocks, especially those in OECD North America, are low."
IEA noted, "A number of structural factors have contributed to lower inventory holdings. New information technologies enhance logistic and scheduling abilities; refining and tank farm consolidations diminish storage requirements; advances in metering and tank construction reduce deadstocks, etc."
Moreover, it said, "These developments are reinforced by the divestiture of integrated downstream assets; the lower credit and carrying positions of independent refiners; and the ability of Wall Street to pressure industry segments, based on indicators such as "return on capital employed."
Still, IEA officials said, "Increased US import dependency (3.5 million b/d) and demand growth (2.9 million b/d) over the 1992-2003 period should generate pressure for larger inventory holdings."
They concluded, "We may need to rethink what were previously considered to be minimum operating levels, if industry is comfortable with lower stocks."
Energy prices
Unleaded gasoline for October delivery jumped by 2¢ to 88.33¢/gal Tuesday on NYMEX. Heating oil for the same month was up by 0.91¢ to 76.77¢/gal. The October contract for benchmark US light, sweet crudes gained 33¢ to $29.18/bbl, while the November position advanced by 31¢ to $29.23/bbl.
The October natural gas contract rebounded by 6.9¢ to $4.73/Mcf Tuesday on NYMEX, recouping most of the previous session's 11¢ loss, as Hurricane Isabel—a Category 4 storm—moved across the Atlantic. However, the National Hurricane Center predicts Isabel will take a generally westerly track "far enough north to largely spare Puerto Rico, the US and British Virgin Islands," said analysts Wednesday at Enerfax Daily.
Futures prices for North Sea Brent oil rebounded from earlier losses on the International Petroleum Exchange on the strength of the NYMEX gasoline futures market Tuesday. However, brokers said the London market's direction still appears to be trending down.
The October Brent contract gained 20¢ to $27.37/bbl on IPE. The October natural gas contract jumped by 4.5¢ to the equivalent of $3.08/Mcf.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes inched up by 3¢ to $26.44/bbl Tuesday.
Contact Sam Fletcher at [email protected]
