By OGJ editors
HOUSTON, June 10 -- As some analysts predicted, energy futures prices rebounded slightly Wednesday on mixed indicators from a government report of US inventories of crude and petroleum products.
The US Energy Information Administration said Wednesday US gasoline stocks rose by 2.1 million bbl to 206.4 million bbl during the week ended June 4, while US crude inventories increased by just 400,000 bbl to 302.1 million bbl. US distillate stocks declined by 600,000 bbl to 108.3 million bbl, with a decrease in diesel fuel more than offsetting an increase in heating oil.
Traders were expecting additions to oil and gasoline inventories of as much as 2 million bbl each. Anything less could trigger a price rebound, analysts said.
Energy prices
The July contract for benchmark US sweet, light crudes increased by 26¢ to $37.54/bbl Wednesday on the New York Mercantile Exchange, while the August contract gained 31¢ to $37.74/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., advanced by 27¢ to $37.55/bbl.
Heating oil for June delivery was up by 1.96¢ to 98.07¢/gal on NYMEX. Gasoline for the same month inched up by 0.1¢ to $1.1673/gal. However, the June natural gas contract lost 3.3¢ to $6.08/Mcf on NYMEX.
In London, the July contract for North Sea Brent oil increased by 24¢ to $35.29/bbl Wednesday on the International Petroleum Exchange. Gas oil for June delivery was up by 75¢ to $314.50/tonne. But the July natural gas contract dipped by 1.3¢ to the equivalent of $3.84/Mcf on IPE.
The Vienna office of the Organization of Petroleum Exporting Countries was closed for a public holiday Wednesday, so there was no report on the average price for the group's basket of seven benchmark crudes.
Gains in Wednesday's markets failed to offset the sharp price drops of Tuesday's session (OGJ Online, June 9, 2004), and the general trend among energy futures prices remained down for the first part of this month. However, Paul Horsnell, Barclays Capital Inc., London, claimed the recent falloff in crude prices doesn't necessarily "herald a major downwards move."
He said, "We expect that the oil market will again move above $40/bbl. The only question is whether this happens due to some turbulent geopolitics and short-run gasoline market dislocations at a time of painfully limited spare capacity, or whether it happens further down the line due to the grinding of some very ferocious fundamentals."
Barclays Capital analysts expect world demand for oil to total 83.2 million b/d in the fourth quarter—"too high a number to be met by current sustainable production, and so the market will have to be balanced through a heavy draw," said Horsnell.
"We are still not seeing enough of a stock build at the current time to provide enough of a cushion for fourth quarter. However, those concerns almost pale into insignificance when the story is rolled on to the seasonal high for demand next year," he said.
As a result, Barclays Capital increased its average price forecast for West Texas Intermediate crude by $3.40 to $37.90/bbl in 2004, rising to $43/bbl for 2010.