MARKET WATCH August crude hits record highs above $75/bbl
Sam Fletcher
Senior Writer
HOUSTON, July 6 -- The front-month crude futures contract jumped to record high prices above $75/bbl as the New York market reopened July 5 after the US Independence Day holiday amid rising demand for oil in the US and China and fears of supply disruptions in the Middle East, Nigeria, and the Gulf of Mexico.
Civil unrest continues in Nigeria, while the 2006 hurricane season poses a potential threat to oil and gas production in the gulf. Meanwhile, a meeting between Iran's top nuclear negotiator, Ali Larijani, and European Union foreign policy chief Javier Solana, scheduled for July 5 in Brussels, was rescheduled for July 6. No official reason was given by Iran for the delay in discussions of a package of incentives offered earlier by the five permanent members of the United Nations Security Council in conjunction with Germany, aimed at getting Iran to postpone its uranium enrichment program.
US inventories
The Energy Information Administration said July 6 commercial US inventories of crude dropped by 2.4 million bbl to 341.3 million bbl in the week ended June 30. However, US gasoline stocks rose by 700,000 bbl to 213.1 million bbl in the same period. The consensus among Wall Street analysts was that gasoline stocks would decline by 800,000 bbl, however, so the unexpected build might dampen the recent escalation of prices. Distillate fuel inventories increased by 1 million bbl to 127.3 million bbl last week, with gains in both ultralow-sulfur diesel and heating oil.
Imports of crude into the US slipped by 7,000 b/d to 10.5 million b/d in the week ended June 30. Input of crude into US refineries fell by 184,000 b/d to 15.9 million b/d with units operating at 93.1% of capacity. Production of both gasoline and distillate fuel declined.
Energy prices
The August contract for benchmark US sweet, light crudes closed at a record high of $75.19/bbl, up $1.26 for the day, after trading at an all-time high of $75.40/bbl for a front-month contact during the July 5 session on the New York Mercantile Exchange. The September contract gained $1.35 to $76.16/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., increased by $1.21 to $75.19/bbl. Gasoline for August delivery jumped by 5.7¢ to $2.28/gal on NYMEX. Heating oil for the same month gained 3.4¢ to $2.06/gal. The August natural gas contract fell by 33.9¢ to $5.77/MMbtu, however.
In London, the August IPE contract for North Sea Brent crude climbed by $1.47 to $73.98/bbl. The July gas oil contract advanced by $1.75 to $638.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes inched up by 7¢ to $676.92/bbl on July 5.
Contact Sam Fletcher at [email protected].