HOUSTON, June -- Energy prices fell June 13 as Tropical Storm Alberto—the first named storm of the 2006 hurricane season—fizzled away without ever threatening offshore production in the Gulf of Mexico.
Prices also were pulled down by speculators dropping out of the commodities market in fear that interest rates may rise to combat inflation.
The International Energy Agency in Paris said June 13 it raised its projection of the growth of world demand for oil products by 160,000 b/d in the second quarter, with total demand growth "broadly unchanged" at 1.24 million b/d for 2006 as a whole. It said global oil supplies rose by 445,000 b/d to 85 million b/d in May, fuelled by increased production from members of the Organization of Petroleum Exporting Countries (up by 215,000 b/d to 29.8 million b/d in May), a lull in North Sea maintenance, and recovering US Gulf of Mexico production after the damage inflicted last year by Hurricanes Katrina and Rita.
Earlier this week, BP PLC Chief Executive John Browne said he expected crude prices to fall to $40/bbl within 5 years and drop as low as $25/bbl in a decade. Most industry analysts disagree that such a steep fall in energy prices is likely, and the New York Mercantile Exchange on June 13 had contracts for benchmark US light, sweet crudes trading above $62/bbl through December 2012.
The Energy Information Administration reported June 13 commercial US inventories of crude fell by 900,000 bbl to 345.7 million bbl during the week ended June 9.
Gasoline stocks increased by 2.8 million bbl to 213.1 million bbl during the same period. Distillate fuel inventories rose by 2.1 million bbl to 122.8 million bbl, as "a large increase in ultra-low sulfur [15 ppm] diesel fuel was almost completely compensated by a decline in regular diesel fuel," said EIA officials. Heating oil increased by 1.8 million bbl, accounting for most of the gain in distillates.
US imports of crude declined by 334,000 b/d to 10.5 million b/d in the week ended June 9. Input of crude into US refineries increased by 196,000 b/d to 15.8 million b/d, however with refineries operating at 92.7% of capacity, the highest level since just before Katrina made landfall last August. Gasoline production increased slightly to 9.2 million b/d in the latest period. Distillate fuel production increased slightly to 4.2 million b/d.
Both the July and August contracts for benchmark US crudes dropped $1.80, to $68.56/bbl and $69.20/bbl respectively, June 13 on NYMEX. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by $1.80 to $68.56/bbl. Gasoline for July delivery fell by 7.25¢ to $2.05/gal on NYMEX. Heating oil for the same month lost 5.97¢ to $1.93/gal. The July natural gas contract fell by 6.1¢ to $6.16/MMbtu.
In London, the July IPE contract for North Sea Brent crude dropped $2.01 to $66.92/bbl. Gas oil for July plunged by $24.25 to $613.75/tonne.
The average price for OPEC's basket of 11 benchmark crudes lost $2.21 to $63.20/bbl on June 13.
Contact Sam Fletcher at [email protected].