MARKET WATCH: Crude prices slip lower in New York futures market
The front-month US benchmark crude contract continued to waffle, retreating 0.1% June 4 in the New York futures market. “But while domestic crude lost momentum, Brent rose on supply concerns as several oil-producing nations continued to witness rising violence,” reported analysts in the Houston office of Raymond James & Associates Inc.
In the equity market, they said, “As investor sentiment soured, the Dow Jones Industrial Average broke a 20-week win streak that baffled technical analysts and made it the best day of the week for bulls this year. The loss continued to underscore the market's perception that the Federal Reserve Bank could scale back its quantitative easing program—a fear that highlights the fragility of the US economy.” The Standard & Poor’s 500 Index was down 0.6% on June 4.
Meanwhile, a scandal over falsified maintenance reports has taken some nuclear power plants offline in South Korea, driving up Asian spot cargo demand for LNG, said analysts with PIRA Energy Group in New York.
“Adding to an already booming gas demand surge in South Korea this year, another two large-scale nuclear power plants have recently been taken offline for up to 4 months,” PIRA analysts reported. “The nuclear problems, which actually emerged last October, will also delay the restart of two other nuclear power units.”
US inventories
The Energy Information Administration said June 5 commercial US crude inventories fell 6.3 million bbl to 391.3 million in the week ended May 31, far below Wall Street’s expectation of a modest decline of 800,000 bbl. Yet crude stocks remain above average for this time of year, EIA said. Gasoline inventories decreased 400,000 bbl to 218.8 million bbl, opposite analysts’ consensus for a 1 million bbl increase. Finished gasoline stocks rose while blending components declined. Distillate fuel inventories climbed 2.6 million bbl to 123.3 million bbl, outstripping the market’s outlook for a 1.4 million bbl gain.
Imports of crude into the US were down 549,000 b/d to 7.3 million b/d last week. In the 4 weeks through May 31, US crude imports exceeded 7.7 million b/d, down 1.2 million b/d from the comparable period a year ago. Gasoline imports last week averaged 514,000 b/d; distillate fuel imports averaged 143,000 b/d.
The input of crude into US refineries increased by 433,000 b/d to 15.5 million b/d last week with units operating at 88.4% of capacity. Gasoline production increased to 9.3 million b/d, and distillate fuel production was up by 4.8 million b/d.
Energy prices
The July contract for benchmark US light, sweet crudes declined 14¢ to $93.31/bbl June 4 on the New York Mercantile Exchange. The August contract slipped 12¢ to $93.55/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was in tandem with the front-month futures contract, down 14¢ to $93.31/bbl.
Heating oil for July delivery, on the other hand, increased 3.15¢ to $2.86/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 3.31¢ to $2.82/gal.
For the second consecutive session, the July natural gas contract inched up 0.7¢, enough to cross the $4/MMbtu threshold on NYMEX. On the US spot market, however, gas at Henry Hub, La., dipped 0.5¢ but closed essentially unchanged, also at a rounded $4/MMbtu.
In London, the July IPE contract for North Sea Brent gained $1.18 to $103.24/bbl. Gas oil for June advanced by $3.50 to $857.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up 99¢ to $99.87/bbl.
Contact Sam Fletcher at [email protected].
About the Author
Sam Fletcher
Senior Writer
I'm third-generation blue-collar oil field worker, born in the great East Texas Field and completed high school in the Permian Basin of West Texas where I spent a couple of summers hustling jugs and loading shot holes on seismic crews. My family was oil field trash back when it was an insult instead of a brag on a bumper sticker. I enlisted in the US Army in 1961-1964 looking for a way out of a life of stoop-labor in the oil patch. I didn't succeed then, but a few years later when they passed a new GI Bill for Vietnam veterans, they backdated it to cover my period of enlistment and finally gave me the means to attend college. I'd wanted a career in journalism since my junior year in high school when I was editor of the school newspaper. I financed my college education with the GI bill, parttime work, and a few scholarships and earned a bachelor's degree and later a master's degree in mass communication at Texas Tech University. I worked some years on Texas daily newspapers and even taught journalism a couple of semesters at a junior college in San Antonio before joining the metropolitan Houston Post in 1973. In 1977 I became the energy reporter for the paper, primarily because I was the only writer who'd ever broke a sweat in sight of an oil rig. I covered the oil patch through its biggest boom in the 1970s, its worst depression in the 1980s, and its subsequent rise from the ashes as the industry reinvented itself yet again. When the Post folded in 1995, I made the switch to oil industry publications. At the start of the new century, I joined the Oil & Gas Journal, long the "Bible" of the oil industry. I've been writing about the oil and gas industry's successes and setbacks for a long time, and I've loved every minute of it.