MARKET WATCH: NYMEX, Brent crude prices dive more than $2/bbl

Crude oil prices on the New York and London markets plummeted more than $2/bbl May 19 upon a strengthening dollar, which analysts attributed to positive US and European economic indicators. Meanwhile, US oil inventories declined last week, a government report showed.

Crude oil prices on the New York and London markets plummeted more than $2/bbl May 19 upon a strengthening dollar, which analysts attributed to positive US and European economic indicators. Meanwhile, US oil inventories declined last week, a government report showed.

The US Energy Information Administration estimated commercial crude oil inventories, excluding the Strategic Petroleum Reserve, decreased 2.7 million bbl for the week ended May 15 compared with the previous week.

In its Petroleum Status Report released May 20, EIA estimated crude oil inventories at 482.2 million bbl, which remains at record levels for this time of year in at least the last 80 years.

On May 19, the dollar reached its highest level against the Japanese yen since Mar. 20 and also maintained momentum against the euro after the European Central Bank discussed plans for its bond purchases stimulus program.

US housing starts in April were higher than expected, which analysts took as a positive economic indicator. The Federal Open Market Committee was scheduled to release minutes from its latest meeting on May 20.

Genscape Inc. said crude oil exports to Canada’s East Coast this year kept oil storage levels below capacity on the US Gulf Coast, particularly Corpus Christi, Tex. This has helped rebalance supply and demand.

“Since the beginning of 2015, nearly 19 million bbl have been shipped from the US Gulf Coast,” Genscape said, adding 10.5 million bbl came from Corpus Christi terminals and 8.4 million bbl from Houston terminals. Genscape provides estimates on US oil storage levels.

“Without this transportation route, storage capacity could have reached critical levels, especially in Corpus Christi,” Genscape said in its report. “Had waterborne shipments to Canada not been possible, other transportation routes…would have been needed to be secured or production cuts would have been needed.”

Gasoline inventories decline

Total US motor gasoline inventories decreased 2.8 million bbl for the week ended May 15, but those levels are above the upper limit of the average range, EIA said. Both finished gasoline inventories and blending components inventories decreased last week.

Distillate fuel inventories decreased 500,000 bbl last week and are in the lower half of the average range for this time of year. Propane-propylene inventories rose 2.6 million bbl last week and are well above the upper limit of the average range.

US refinery inputs averaged more than 16.2 million b/d for the week ended May 15, which was 245,000 b/d more than the previous week’s average. Refineries operated at 92.4% of capacity.

Gasoline production decreased last week, averaging about 9.7 million b/d. Distillate fuel production also decreased last week, averaging more than 4.8 million b/d.

US oil imports averaged 7.2 million b/d last week, up 318,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged more than 7 million b/d, which was 0.4% above the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 542,000 b/d. Distillate fuel imports averaged 227,000 b/d last week.

Energy prices

The June crude oil contract on the New York Mercantile Exchange lost $2.17 on May 19 to settle at $57.26/bbl. The July contract dropped $2.25 to settle at $57.99/bbl.

The natural gas contract for June declined 6¢ to a rounded $2.95/MMbtu. The Henry Hub, La., gas price was $3.07/MMbtu, up 6¢.

Heating oil for June dropped a rounded 6¢ a rounded $1.93/gal. The price for reformulated gasoline stock for oxygenates blending for June decreased 4.6¢ to a rounded $2/gal.

The July ICE contract for Brent crude dropped $2.25 to $64.02/bbl while the August contract dropped $2.20 to $64.55/bbl, respectively. The ICE gas oil contract for June was down $15.50 to $593.25/tonne.

The average price for the OPEC’s basket of 12 benchmark crudes for May 19 was $61.11/bbl, down $1.87.

Contact Paula Dittrick at paulad@ogjonline.com.

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

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