MARKET WATCH: Lower US oil inventory supports NYMEX, Brent crude prices

Light, sweet crude oil prices settled above $47/bbl on the New York market July 19 while Brent crude oil prices approached $50/bbl but settled lower on the London market the same day, supported by a decline in US oil inventories.

Light, sweet crude oil prices settled above $47/bbl on the New York market July 19 while Brent crude oil prices approached $50/bbl but settled lower on the London market the same day, supported by a decline in US oil inventories.

The US Energy Information Administration said the nation’s commercial crude oil inventories, excluding the Strategic Petroleum Reserve, fell 4.7 million bbl for the week ended July 14 compared with the previous week.

The latest total was estimated at 490.6 million bbl, which EIA called the upper half of the average range for this time of year (OGJ Online, July 19, 2017).

“Although imports and production growth remain headwinds to the bull case, demand has remained constructive,” said Jenna Delaney, senior oil analyst, Platts Analytics, the forecasting and analytics unit of S&P Global Platts.

“Inventories have continued to decline. The bullish tilt of this report, however, was not sufficient to drive the Brent price back above the psychological threshold of $50/bbl,” she said.

Weekly US crude oil production growth has accelerated in July after the EIA’s Petroleum Status Report posted lower production growth during most of May and June, Delaney noted.

Total US oil production for the week ended July 14 was 9.429 million b/d, up 32,000 b/d from the previous week. Alaska produced 459,000 b/d of oil, up 2,000 b/d for the week while Lower 48 production climbed 30,000 b/d for the week to 8.97 million b/d.

“The trend of rising crude production in the Lower 48 remains a bearish factor,” Delaney said. “Expectations on how quickly US production is likely to grow continues to be a significant driver of market sentiment.”

Energy prices

The August light, sweet crude contract on NYMEX gained 72¢ on July 19 to settle at $47.12/bbl. The September contract was up 73¢ to close at $47.32/bbl.

The NYMEX natural gas price for August fell 2¢ to $3.06/MMbtu. But the US spot gas benchmark gained for the day. The Henry Hub cash gas price was $3.10/MMbtu, up 1¢.

Heating oil for August was up 4¢ to a rounded $1.55/gal. Reformulated gasoline stock for oxygenate blending for August gained nearly 4¢ to $1.62/gal.

The Brent crude contract for September on London’s ICE gained 86¢ to $49.70/bbl while the October contract was up 85¢ to $49.93/bbl. The August gas oil contract was $456/tonne, up $9.75.

The Organization of Petroleum Exporting Countries’ basket of crudes on July 19 was $46.85/bbl, up 20¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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