MARKET WATCH: Oil prices fall on expected rise in stocks
By OGJ editors
HOUSTON, Apr. 8 -- Energy prices were lower again Apr. 7 as markets anticipated a rise in petroleum inventories. "Energy stocks followed the broader market," said analysts at Raymond James & Associates Inc.
Raymond James analysts noted that the International Energy Agency will release its latest monthly report Apr. 10. "We continue to believe that the IEA's forecast for 2009 global demand and non-OPEC supply are too high and need to be revised lower," they said, adding, "Recall that the IEA expects world demand to decrease by 1.5% in 2009 (compared with our forecast of a 3.5% decline)."
Meanwhile, analysts at Pritchard Capital Partners LLC noted that Qatar Oil Minister Abdullah bin Hamad al-Attiyah has said that a price of $50/bbl is "reasonable" for today's world economy and that he doesn't expect prices to rebound to $70/bbl this year. "Saudi Arabia cut its official selling prices for all grades oil for customers in the US, and northwestern and Mediterranean Europe," Pritchard analysts said.
US inventories
The US Energy Information Administration said Apr. 8 US commercial crude inventories increased 1.7 million bbl to 361.1 million bbl in the week ended Apr. 3. That was nearly in line with Wall Street analysts' consensus of a 1.5 million bbl gain and well below the 7.5 million bbl build earlier estimated by the American Petroleum Institute. US crude stocks are above average for this time of year, EIA said.
Gasoline inventories are above average as well, with a gain of 0.6 million bbl to 217.4 million bbl during the same week. Wall Street expected a draw of 1.4 million bbl during the week. Distillate fuel stocks fell by 3.4 million bbl to 140.8 million bbl and also are above average for this time of year. The Wall Street consensus was for a draw of 0.6 million bbl.
Imports of crude into the US decreased 222,000 b/d to 9.3 million b/d last week. The input of crude into US refineries increased by 129,000 b/d to 14.3 million b/d, with units operating at 81.8% of capacity. Gasoline production increased 300,000 b/d to 9 million b/d while distillate fuel production was unchanged at 3.9 million b/d.
Energy prices
The May contract for benchmark US fell $1.90 to $49.15/bbl Apr. 7 on the New York Mercantile Exchange. On the US spot market, West Texas Intermediate at Cushing, Okla., was down the same amount to the same settle price. The June crude contract fell $1.47 to $51.91/bbl on NYMEX. Heating oil for May decreased 2.88¢ to $1.39/gal. The May contract for reformulated blend stock for oxygenate blending (RBOB) declined 1.51¢ to $1.46/gal.
Natural gas for the same month dropped 17¢ to $3.56/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., fell 15¢ to $3.59/MMbtu.
In London, the May IPE contract for North Sea Brent crude dropped $1.02 to $51.22/bbl. Gas oil for April fell 50¢ to $439.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes lost 94¢ to $50.96/bbl on Apr. 7.