MARKET WATCH: Crude, gas prices recover slightly in mixed markets

Energy commodities recovered slightly July 23 with front-month crude up 0.3% in New York, apparently pulled along by improvements in the equity market.
July 24, 2013
3 min read

Energy commodities recovered slightly July 23 with front-month crude up 0.3% in New York, apparently pulled along by improvements in the equity market.

Benchmark crudes in both the US and UK “largely shrugged off the disappointing Hong Kong and Shanghai Banking Corp.’s flash purchasing managers index reading for China (47.7 for July, compared with a previous reading of 48.2),” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. Instead, traders apparently were reassured by Premier Li Keqiang’s claim China’s economic growth will not fall below 7% this year.

“This has many thinking that stimulus might be forthcoming to place this floor under economic activity,” Ground reported. However, he said, “We are not so confident that growth-at-all-costs stimulus will be forthcoming and rather feel that, as with last year’s ‘mini-stimulus,’ any fiscal policy will keep restructuring of the economy as the ultimate goal and consequently will not guarantee a dramatic improvement in economic growth.”

Meanwhile, the Dow Jones Industrial Index climbed 0.1% July 23 to top its former record high of 5 days earlier. Energy stocks bucked both equity markets and crude's modest rise, with the SIG Oil Exploration & Production Index down 0.4% and the Oil Service Index down 0.5%.

US inventories

The Energy Information Administration said July 24 commercial US crude inventories dropped 2.8 million bbl to 364.2 million bbl in the week ended July 19, matching exactly the Wall Street consensus. Gasoline stocks fell 1.4 million bbl to 222.7 million bbl, however, opposite analysts’ expectations of an increase of 1.7 million bbl. Finished gasoline inventories increased while blending components decreased. Distillate fuel declined 1.2 million bbl to 126.5 million bbl last week; a gain of 1.9 million bbl was anticipated.

Imports of crude into the US increased 327,000 b/d to 8 million b/d last week. In the 4 weeks through July 19, US crude imports averaged 7.7 million b/d, down 1.3 million b/d from the comparable period a year ago. Gasoline imports last week averaged 322,000 b/d while distillate fuel imports averaged 168,000 b/d.

The input of crude into US refineries declined 206,000 b/d to 160 million b/d last week with units operating at 92.3% of capacity. Gasoline production increased to 9.2 million b/d last week, but distillate fuel production decreased to 5 million b/d.

Energy prices

The new front-month September contract for benchmark US light, sweet crudes increased 29¢ to $107.23/bbl July 23 on the New York Mercantile Exchange. The October contract gained 28¢ to $105.79/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 32¢ to match the $107.23 closing of the September crude futures contract.

Heating oil for August delivery recovered 0.29¢ but closed essentially unchanged at a rounded $3.07/gal on NYMEX. Reformulated stock for oxygenate blending for the same month inched up 0.4¢ but also finished virtually unchanged at a rounded $3.06/gal.

The August natural gas contract took back 6.6¢ to $3.74/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., regained 1.2¢ to $3.71/MMbtu.

In London, the September IPE contract for North Sea Brent continued its rise, up 27¢ to $108.42/bbl. Gas oil for August was up $1.25 to $919.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes lost 19¢ to $105.95/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.

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