MARKET WATCH: NYMEX crude oil drops back below $49/bbl

Crude oil futures retreated Mar. 10, settling below $49/bbl on the New York market as traders awaited the weekly government oil and product inventory report, and also on a strengthening dollar, analysts said.

Crude oil futures retreated Mar. 10, settling below $49/bbl on the New York market as traders awaited the weekly government oil and product inventory report, and also on a strengthening dollar, analysts said.

The dollar hit multiyear highs against the euro and the yen Mar. 10. The US Federal Reserve is expected to begin raising interest rates.

The Energy Information Administration said US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 4.5 million bbl from the previous week.

At 448.9 million bbl, crude oil inventories remain at the highest level for this time of year in at least 80 years, the weekly petroleum status report said.

Separately, EIA lowered its forecasts for US light, sweet crude oil prices in its March Short-Term Energy Outlook (OGJ Online, Mar. 10, 2015).

EIA forecast NYMEX oil prices will average $52.15/bbl for 2015 compared with its previous forecast for an average of $55.02/bbl. For 2016, EIA said it expects an average of $70/bbl, which was down from its earlier forecast for $71/bbl.

US oil production is expected to average 9.3 million b/d during 2015, climbing to 9.5 million b/d in 2016. Government statistics show the nation’s highest annual average so far was 9.6 million b/d in 1970.

Adam Sieminski, EIA administrator, said US commercial crude oil inventories—already at the highest level since 1930—are expected to continue growing during the next 2 months.

“The increase in oil inventories is expected to moderate as refineries ramp up their processing of crude oil into petroleum products in the second quarter and domestic oil production slows,” Sieminski said. “US crude oil storage capacity is now 62% full compared with 48% a year ago.”

Gasoline inventory drops

Total motor gasoline inventories decreased by 200,000 bbl last week but are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week, EIA said in the petroleum report.

Distillate fuel inventories increased by 2.5 million bbl last week but are in the lower half of the average range for this time of year. Propane-propylene inventories fell 1.3 million bbl last week but are well above the upper limit of the average range.

Refinery inputs averaged 15.3 million b/d during the week ended Mar. 6, which was 187,000 b/d more than the previous week’s average. Refineries operated at 87.8% of capacity.

Gasoline production decreased, averaging about 9.2 million b/d. Distillate fuel production increased last week, averaging 4.8 million b/d.

US crude oil imports averaged 6.8 million b/d last week, down by 575,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged more than 7.1 million b/d, 1.2% below the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 536,000 b/d. Distillate fuel imports averaged 524,000 b/d last week.

Energy prices

The New York Mercantile Exchange April crude oil contract was down $1.71 to $48.29/bbl Mar. 10, and the May contract decreased $1.59 to $50.07/bbl.

The natural gas contract for April rose 5.4¢ to a rounded $2.73/MMbtu. The Henry Hub, La., gas price was $2.73/MMbtu, up 1¢.

Heating oil for April dropped nearly 2.6¢ to a rounded $1.81/gal. Reformulated gasoline stock for oxygenate blending for April delivery was down 5.6¢ to a rounded $1.82/gal.

The April ICE contract for Brent crude oil declined $2.14, settling at $56.39/bbl, and the May contract dropped $2.21 to $56.87/bbl. The ICE gas oil contract for March dropped $14.50 to $561.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on Mar. 10 was $53.03/bbl, down $1.50.

Contact Paula Dittrick at paulad@ogjonline.com.

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.

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