Sam Fletcher
Senior Writer
HOUSTON, May 10 -- The front-month crude futures contract again rebounded above $70/bbl May 9 in the New York market as US officials rejected the first direct communication from an Iranian leader in 27 years.
Iranian officials had hyped the letter from President Mahmoud Ahmadinejad to US President George W. Bush as the means for opening a new dialogue between the two countries. That triggered what some analysts described as a "knee-jerk" market reaction that caused a sharp fall in energy prices the previous week. But US officials said the letter failed to address the nuclear dispute now facing the United Nations Security Council, resurrecting market fears of supply disruptions.
Strengthening of the euro against the US dollar also helped push up commodity prices and lifted front-month gold futures prices to a 26-year high.
US inventories rise
Meanwhile, the Energy Information Administration said May 10 that commercial US inventories of crude inched higher by 300,000 bbl to 347 million bbl during the week ended May 5. US gasoline stocks jumped by 2.4 million bbl to 205.1 million bbl in the same period, while distillate fuel inventories increased by 200,000 bbl to 114.7 million bbl.
Imports of crude into the US rose by 196,000 b/d to 10 million b/d in the same week. Total gasoline imports exceeded 1.6 million b/d, the highest weekly average ever, EIA reported. The input of crude into US refineries increased by 272,000 b/d to 15.3 million b/d, with units operating at 90.2% of capacity. That marked "the first weekly average above 90% since the week ended Dec. 2, [2005]" EIA said. Production increased to 8.9 million b/d of gasoline and 4 million b/d of distillate fuel.
Energy prices
The June contract for benchmark US light, sweet crudes gained 92¢ to $70.69/bbl May 9 on the New York Mercantile Exchange, while the July contract increased by 91¢ to $72.22/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by 92¢ to $70.70/bbl. Gasoline for June delivery escalated by 4.3¢ to $2.05/gal on NYMEX. Heating oil for the same month increased by 4.06¢ to $2/gal.
The June natural gas contract fell by 11.5¢ to $6.58/MMbtu, however, "as moderate spring temperatures slowed demand," said analysts at Enerfax Daily. "Cooling demand is forecast to be 24% below normal through May 16," they said. "Only the Southwest will have above-average demand."
In London, the May IPE contract for North Sea Brent crude gained 87¢ to $71.08/bbl. The May gas oil contract jumped by $21.50 to $625.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes increased by 38¢ to $64.89/bbl on May 9.
Contact Sam Fletcher at [email protected].
