MARKET WATCH: NYMEX crude oil prices drop before weekly inventory report

US light, sweet crude oil prices for March delivery settled down more than $1/bbl on the New York market Feb. 18 awaiting the government’s weekly report on US oil and petroleum product supplies, which rose to a new record.

US light, sweet crude oil prices for March delivery settled down more than $1/bbl on the New York market Feb. 18 awaiting the government’s weekly report on US oil and petroleum product supplies, which rose to a new record.

Fitch Ratings said most US refineries should be able to weather the near-term effects of the United Steelworkers union strike because of ample gasoline supplies and a mild winter.

“However, the 11 refineries now affected could see tighter refined product balances if the strike persists over a long period,” said Mark Sadeghian, Fitch senior director. “This could be especially true for gasoline. With gas prices bottoming out and driving season around the corner, a prolonged strike could tighten up gasoline balances.”

Sadeghian believes oversupply in the crude oil markets gradually will correct itself while oil and gas companies reduce their budgets, eventually resulting in lower production.

“However in the near term, oversupply will pressure crude spreads and hinder some of the industry’s windfall profits,” he said.

Meanwhile, an explosion was reported at the ExxonMobil Corp. 149,500-b/d refinery in Torrance, Calif., on Feb. 18. Cause of the accident was under investigation, and few details were available about the status of refinery operations (OGJ Online, Feb. 19, 2015).

The Energy Information Administration said US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 7.7 million bbl for the week ended Feb. 13 compared with the previous week.

Analysts surveyed by the Wall Street Journal in advance of the report had said they expected supplies would build by 3.7 million bbl.

At 425.6 million bbl, crude oil inventories remained at the highest level for this time of year in about 80 years, the Petroleum Status Report showed. EIA released it Feb. 19, a day later than normal because of the Presidents Day holiday.

In its separate weekly Gas Natural Storage Report, EIA estimated working gas in underground storage across the Lower 48 at a rounded 2.16 tcf as of Feb. 13, which was a net decline of 111 bcf from the previous week. Stocks were 678 bcf higher than last year at this time and 58 bcf above the 5-year average of 2 tcf for this period.

Gasoline supply grows

Total motor gasoline inventories increased by 500,000 bbl for the week ended Feb. 13, which was above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week, EIA said.

Distillate fuel inventories decreased by 3.8 million bbl and are in the lower half of the average range for this time of year, EIA said. Propane-propylene inventories fell 3.5 million bbl last week but are well above the upper limit of the average range.

US refinery inputs averaged over 15.4 million b/d for the week ended Feb. 13, which was 122,000 b/d fewer than the previous week’s average. Refineries operated at 88.7% of capacity.

Gasoline production increased last week, averaging 9.2 million b/d. Distillate fuel production decreased last week, averaging over 4.6 million b/d.

US crude oil imports averaged 7.1 million b/d, down by 181,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged 7.3 million b/d, which was 3.6% below the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 635,000 b/d while distillate fuel imports averaged 216,000 b/d, EIA said.

Energy prices

The New York Mercantile Exchange March crude oil contract dropped $1.39 to $52.14/bbl Feb. 18 while the April contract declined by $1.47 to $52.82/bbl.

The natural gas contract on NYMEX for March rose 7¢ to a rounded $2.83/MMbtu. The Henry Hub, La., gas price was $2.93/MMbtu on Feb. 18, down 2¢.

Heating oil for March declined by 1.8¢ to a rounded $1.96/gal. Reformulated gasoline stock for oxygenate blending for March delivery fell 1.6¢ to a rounded $1.57/gal.

The April ICE contract for Brent crude oil dropped by $2, settling at $60.53/bbl. The May contract was down $1.92 to $61.27/bbl. The ICE gas oil contract for March gained 75¢ to $577.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on Feb. 18 was $56.83/bbl, up 14¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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

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