HOUSTON, June 29 -- Energy prices continued to climb June 28 as the US Energy Information Administration reported the first falloff in US gasoline inventories in 9 weeks and the biggest decline in crude stocks since late November.
Gasoline stocks fell by 1 million bbl to 212.4 million bbl during the week ended June 23, EIA said (OGJ Online, June 28, 2006). Commercial US stocks of crude dropped 3.4 million bbl to 343.7 million bbl during the same period. However, distillate fuel inventories increased by 1.8 million bbl to 126.3 million bbl.
Gasoline drives market
"Gasoline has been the key market driver recently, having risen more than any other commodity over the past week," said Paul Horsnell with Barclays Capital Inc., London.
"There has been much talk of gasoline demand weakening, but the latest weekly reading is, at 9.54 million b/d, the highest [level of demand] since last July. The June-to-date demand indication is now 9.456 million b/d, exceeding the highest demand ever recorded for a month (the previous high being 9.454 million b/d in August 2005)," he said.
So far, US gasoline demand is up by 0.8% in June from year-ago levels. "But that is not that shoddy given the 30% year-to-year increase in retail prices, and it is also notable for being the fifth straight month of year-to-year demand increases," Horsnell said.
Meanwhile, US imports of gasoline are still falling, with inventories particularly tight on the East Coast. EIA's latest data don't reflect recent disruptions of refinery operations around Lake Charles, La. "It appears to us that while demand remains so strong it will take another swing up in imports to get the US gasoline market back into balance," Horsnell said.
The rise in gasoline futures prices in the New York market was dampened June 28 as the US Coast Guard reopened Calcasieu Lake near Lake Charles to commercial and recreational traffic. The connecting Calcasieu Ship Channel has been closed since June 21 because of an oil spill Citgo Petroleum Corp.'s 450,000 b/d Lake Charles refinery that disrupted supplies and production at four area refineries (OGJ Online, June 27, 2006).
The US Department of Energy said June 28 it approved two loan requests totaling 750,000 bbl of crude from the Strategic Petroleum Reserve to two of the refineries shut off from supplies by the oil spill. That includes 500,000 bbl to ConocoPhillips's 425,000 b/d Lake Charles refinery and 250,000 bbl to Citgo. US Coast Guard officials earlier said they expected the spill to be cleaned up by the end of this week.
The August contract for benchmark US sweet, light crudes increased by 27¢ to $72.19/bbl June 28 on the New York Mercantile Exchange. The September contract gained 34¢ to $73.14/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by 27¢ to $72.19/bbl. Gasoline for July delivery inched up by 0.74¢ to $2.21/gal on NYMEX. Heating oil for the same month dropped 2.13¢ to $1.94/gal.
The August natural gas contract fell by 15.2¢ to $6.16/MMbtu. EIA reported June 29 the injection of 66 bcf of natural gas into US underground storage during the week ended June 23. That was down from 79 bcf the previous week and from 98 bcf during the same period a year ago. US gas storage now stands at 2.5 tcf, up by 423 bcf from year-ago levels and 611 bcf above the 5-year average.
In London, the August IPE contract for North Sea Brent crude escalated by 43¢ to $71.41/bbl. The July gas oil contract continued to waffle, down by $3.50 to $634/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes increased by 10¢ to $65.89/bbl on June 28.
Contact Sam Fletcher at [email protected].