MARKET WATCHCrude tops $71/bbl on hurricane speculation
Sam Fletcher
Senior Writer
HOUSTON, May 24 -- Crude prices shot past $71/bbl May 23 as speculators dumped additional cash into commodities futures markets in expectation of another strong hurricane season starting June 1.
The National Oceanic and Atmospheric Administration is predicting 13-16 tropical storms will form in the North Atlantic this season, with 8-10 developing into hurricanes, 4-6 of which are likely to be major storms (OGJ Online, May 23, 2006).
Reports that Venezuela's energy minister is calling for production cuts by the Organization of Petroleum Exporting Countries also made traders nervous.
US inventories
Meanwhile, the Energy Information Administration reported May 24 that US gasoline inventories jumped by 2.1 million bbl to 208.5 million bbl during the week ended May 19. That means gasoline supplies are still in the lower half of the average range for this time of year with the US summer driving season kicking off in the May 27-29 holiday weekend.
Commercial stocks of US crude dropped 3 million bbl to 343.9 million bbl during the same week. Distillate fuel stocks increased, however, by 2.5 million bbl to 117.1 million bbl, with increases in both diesel fuel and heating oil.
Imports of crude into the US fell by 826,000 b/d to 9.6 million b/d in the latest period. Total gasoline imports averaged more than 1.6 million b/d, the second highest weekly average ever, said EIA officials.
The input of crude into US refineries dipped by 3,000 b/d to 15.3 million b/d, with refineries operating at 89.7% of capacity. Gasoline production remained at 9.2 million b/d, while distillate fuel production increased to 4.1 million b/d.
Energy prices
The new front-month July contract for benchmark US light, sweet crudes jumped by $1.80 to $71.76/bbl May 23 on the New York Mercantile Exchange. The August contract gained $1.73 to $72.49/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., escalated by $2.28 to $71.51/bbl. Heating oil for June delivery on NYMEX climbed by 6.63¢ to $2/gal. Gasoline for the same month was up by 5.06¢ to $2.11/gal.
The June natural gas contract dipped by 1.8¢ to $6.26/MMbtu, "caught between higher cash prices on warmer weather and soaring storage levels," said analysts at Enerfax Daily.
In London, the July IPE contract for North Sea Brent crude climbed by $1.65 to $71/bbl. Gas oil for June delivery increased by $26.25 to $631/tonne.
The average price for OPEC's basket of 11 benchmark crudes increased by $1.94 to $64.45/bbl on May 23.
Contact Sam Fletcher at [email protected].