MARKET WATCH: NYMEX, Brent crude prices split direction on mixed inventory

The light, sweet crude oil price for June delivery gained a few cents to settle under $50/bbl on the New York market Apr. 26 while Brent crude oil for June delivery in London dropped modestly to settle under $52/bbl.

The light, sweet crude oil price for June delivery gained a few cents to settle under $50/bbl on the New York market Apr. 26 while Brent crude oil for June delivery in London dropped modestly to settle under $52/bbl.

Oil prices edged down Apr. 27 in early New York trading, which analysts attributed to mixed US inventory statistics and lingering concerns that production-cut targets by the Organization of Petroleum Exporting Countries and other major producers might not reduce ample world oil supplies as fast as some hope.

“There is a deeply bearish market sentiment that is going to pick up on rising gasoline stockpiles despite crude inventories falling,” said Paul Horsnell, Standard Chartered head of commodity research. “There is impatience that OPEC can’t clear the surplus.”

Sam Margolin of Cowen & Co. said he expects OPEC will extend its production-cut targets when the cartel meets in May.

“Hyper-focus on weekly US inventory data is not bringing clarity,” Margolin said. “US inventories are unlikely to be the driver of a potential move higher in oil prices.”

US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, decreased 3.6 million bbl for the week ended Apr. 21, the US Energy Information Administration said Apr. 26. The latest estimate put the total at 528.7 million bbl (OGJ Online, Apr. 26, 2017).

US gasoline inventories rose 3.37 million bbl for the week ended Apr. 21 to 241 million bbl total because of a jump in US crude oil imports. US refinery utilization was 94.1% compared with 88.1% for the same time last year.

Increased refinery throughput helped reduce US crude oil levels in storage, but product stocks rose because product demand is somewhat sluggish, said Jack Laursen of S&P Global Platts.

Robust US crude oil imports might raise questions related to the consequences of coordinated OPEC output cuts, although many US refiners buy Middle Eastern crudes, Laursen said.

Imports from Saudi Arabia remained robust, rising 6,000 b/d to 1.191 million b/d, slightly above the 2016 average of 1.105 million b/d. Imports from Iraq rose 169,000 b/d to 942,000 b/d, the highest level since the week ended Jan. 6 and well above the 2016 average of 423,000 b/d, he said.

“Surprisingly, imports from Canada rose 378,000 b/d to 1.191 million bbl despite production issues at Syncrude's Mildred Lake upgrader following a fire in March,” Laursen said. Meanwhile, US crude exports also rose 587,000 b/d to 1.152 million b/d.

The Weekly Petroleum Status Report said US oil production was 9.265 million b/d for the week ended Apr. 21, up 13,000 bbl from the previous week. Lower 48 production was 8.742 million b/d, up 20,000 b/d while Alaska production was 523,000 b/d, down 7,000 b/d from the previous week.

Energy prices

The June crude oil contract on the New York Mercantile Exchange gained 6¢ on Apr. 26 to close at $49.62/bbl. The July contract increased 6¢ to $49.96/bbl.

The natural gas price for May rose nearly 10¢ to a rounded $3.14/MMbtu. The Henry Hub cash gas price was $3.02/MMbtu, up 6¢.

Heating oil for May edged down less than 1¢ to remain at a rounded $1.54/gal. Reformulated gasoline stock for oxygenate blending for May was down 3¢ to a rounded $1.59/gal.

The Brent crude contract for June on London’s ICE fell 28¢ to settle at $51.82/bbl. The July contract was down 16¢ to $52.41/bbl. The May gas oil contract climbed $3.50 to $467.25/tonne.

OPEC’s basket of crudes closed Apr. 26 at $49.63/bbl, up 42¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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