Sam Fletcher
Senior Writer
HOUSTON, Aug. 1 -- The September contract for benchmark US crudes soared to record highs above $78/bbl July 31 on the New York market, driven by news that US consumer confidence hit a 6-year-high.
Some analysts suggested that crude prices could soon climb above $80/bbl even if there are no additional supply disruptions as a result of politics or weather. Trading on the New York Mercantile Exchange "is still in a technical drive to break the all time high of $78.40/bbl and target $80/bbl," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. He said, "Product cracks have improved slightly into the expiry [of the August contract], crude time spreads are steady to slightly weaker, and natural gas gave away all of the previous day's gain" on the final trading day of July.
Analysts in the Houston office of Raymond James & Associates Inc. credited the oil price surge to expectations that rising refinery demand will further drain US inventories. However, the front-month crude price was slightly below that benchmark in premarket trading Aug. 1, "possibly due to an early bout of profit-taking," they said. Raymond James analysts see signs that the Organization of Petroleum Exporting Countries may decide to increase production at its Sept. 11 meeting if the price rises too high. If OPEC maintains its current production, however, that could result in a fourth quarter decline in supplies, driving prices up.
US inventories
The Energy Information Administration said Aug. 1 that commercial US crude inventories dropped 6.5 million bbl to 344.5 million bbl during the week ended July 27, still above the normal range for that time of year. US gasoline stocks increased 600,000 bbl to 204.7 million bbl during the same week, still below average. "An increase in gasoline blending components more than compensated for a slight decline in finished gasoline inventories," said EIA officials. Distillate fuel inventories rose 2.8 million bbl to 126.5 million bbl. Propane and propylene inventories increased 2 million bbl to 49.9 million bbl.
US imports of crude declined by 213,000 b/d to 10.2 million b/d in that same period. Gasoline imports dropped to 1.2 million b/d from the prior week's record 1.7 million b/d. Distillate fuel imports averaged 339,000 b/d.
The input of crude into US refineries increased by 388,000 b/d to 16.2 million b/d in the week ended July 27, the largest input since the week ended Aug. 26, 2005, EIA said. Refineries were operating at 93.6% of capacity in the latest period. Gasoline production surged to a record 9.4 million b/d. Distillate fuel production increased to 4.3 million b/d.
Energy prices
The September contract for benchmark US light, sweet crudes hit a record high for intraday trading at $78.28/bbl July 31 on NYMEX before closing at a record $78.21/bbl, up $1.38 for the day. The previous record closing for a front-month crude contract was $77.03/bbl on July 14, 2006. The previous intraday record price for crude was set during the same session at $77.95/bbl. The highest price ever recorded for a benchmark crude contract trading was $78.40/bbl in overnight electronic trading prior to the regular NYMEX session in mid-July of last year.
The October contract gained $1.39 to $77.60/bbl on NYMEX. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1.38 to $78.22/bbl. Heating oil for August delivery increased by 3.49¢ to $2.10/gal on NYMEX. The August contract for reformulated blendstock for oxygenate blending (RBOB) gained 5.52¢ to $2.14/gal.
The September natural gas contract fell 30.8¢ to $6.19/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., increased by 15.5¢ to $6.44/MMbtu.
In London, the September IPE contract for North Sea Brent crude gained $1.31 to $77.05/bbl. Gas oil for August advanced by $10 to $654.75/tonne.
The average price for OPEC's basket of 11 reference crudes increased 16¢ to $72.40/bbl on July 31.
Contact Sam Fletcher at [email protected].