Sam Fletcher
Senior Writer
HOUSTON, Dec. 2 -- The January contract for benchmark US light sweet crudes plummeted by $3.64—the largest single-day decline in more than 3 years—to $45.49/bbl Wednesday on the New York Mercantile Exchange after the Energy Information Administration reported a jump in US heating oil stocks and a nominal increase in crude inventories.
EIA said early Wednesday US distillate fuel inventories rose by 2.3 million bbl to 117.9 million bbl during the week ended Nov. 26, with increases in both heating oil and diesel fuel (OGJ Online, Dec. 1, 2004). Commercial US inventories of crude increased by 900,000 bbl to 293.3 million bbl, while gasoline stocks gained 3 million bbl to 205.7 million bbl during the same period.
Yet US distillate fuel stocks still remain below the lower end of the average range for this time of year and 13% below year-ago levels. Moreover, Paul Horsnell, Barclays Capital Inc., London, said Wednesday, "We would not make too much of the rise in total distillate inventories and in its two components. As has been noted before, the [winter heating] season has not started yet, and rises at this point are neither unusual nor trend breaking." The real test will come in January as a function of weather, he said.
Meanwhile, Horsnell said, "There is no demand side weakness evident, with implied gasoline demand at 9.204 million b/d in the latest data and running 2.3% higher (203,000 b/d) for the November data released so far. Distillate demand is still pounding away at 8.5% [year-over-year] growth, although the latest implied demand is at 4.092 million b/d just a little weaker than the two previous readings above 4.2 million b/d."
Energy prices
The January crude contract traded as low as $49.12/bbl Wednesday before rebounding to its closing price. February crude was down by $3.56 to $45.70/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., lost $1.64 to $47.50/bbl. Heating oil for January delivery fell by 8.9¢ to $1.33/gal on NYMEX. Gasoline for the same month lost 8.34¢ to $1.20/gal. The January natural gas contract plunged by 20.7¢ to $7.41/MMbtu.
In London, the January contract for North Sea Brent crude tumbled by $3.20 to $42.31/bbl on the International Petroleum Exchange.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes declined by $1.74 to $38.03/bbl Wednesday.
Contact Sam Fletcher at [email protected]
