MARKET WATCHCrude futures price hits 3-month low

The front-month crude contract registered the biggest price drop in 3 months Apr. 9 in the New York market following Iran's release of 15 UK sailors and marines last week and amid speculation the US will report this week a jump in oil inventories due to unplanned shutdowns of refining units.

Sam Fletcher
Senior Writer

HOUSTON, Apr. 10 -- The front-month crude contract registered the biggest price drop in 3 months Apr. 9 in the New York market following Iran's release of 15 UK sailors and marines last week and amid speculation the US will report this week a jump in oil inventories due to unplanned shutdowns of refining units.

Analysts at the Société Générale Group expect the US Energy Information Administration to report Apr. 11 the first build of gasoline stocks of this season after an "unrealistic" draw of 5 million bbl to 205.2 million bbl during the week ended Mar. 30, marking 8 consecutive weeks of declines. Refinery problems in the Midwest are inflating the local stock build, while Canadian crude exports to the same area are making market prices for West Texas Intermediate "incredibly weak" vs. North Sea Brent crude. The primary problem, said SGG analysts, is "not enough crude on the Atlantic Basin and too much in Cushing, [Okla.,]" a primary delivery point for the US spot and futures markets. Crude supplies in Cushing surged by 12% in the week ended Mar. 30.

Energy prices
The May contract for benchmark US sweet, light crudes dropped $2.77 to $61.51/bbl Apr. 9 on the New York Mercantile Exchange. The June contract fell $2.06 to $64.31/bbl. On the US spot market WTI was down $2.77 to $61.52/bbl. Heating oil for May delivery lost 4.52¢ to $1.82/gal on NYMEX. The April contract for reformulated blend stock for oxygenate blending (RBOB) declined by 3.42¢ to $2.09/gal.

The May natural gas contract dropped 6.1¢ to $7.55/MMbtu on NYMEX. On the US spot market, however, natural gas at Henry Hub, La., increased by 13.5¢ to $7.66/MMbtu.

In London, the May IPE contract for North Sea Brent crude lost $1.65 to $66.59/bbl. Gas oil for April escalated by $4.75 to $588/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes declined by 46¢ to $63.55/bbl on Apr. 9. So far this year, OPEC's basket price has average $55.22/bbl, down from $57.96/bbl during the same period in 2006. For all of last year, however, OPEC's basket price averaged $61.08/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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