MARKET WATCH: Oil prices rise modestly; gas futures contract falls

Oil prices rose modestly July 9 “on the back of a US equity rally,” with the front-month crude contract up 0.4% “to a 14-month high” in the New York market, said analysts in the Houston office of Raymond James & Associates Inc.

“Amid what we view as a classic ‘fear premium’ in the oil market, Brent crude followed West Texas Intermediate higher,” they said. Raymond James analysts noted the military coup in Egypt so far has had “zero impact” on crude production in that country or on oil shipments through the Suez Canal.

Meanwhile, Egypt’s interim government installed Hazem El-Beblawi, former finance minister, as the new prime minister. “The new premier aims to focus on economic concerns rather than indulging in partisan squabbling, although whether he will have the power to do anything useful remains to be seen,” Raymond James analysts said.

The interim government ordered July 10 the arrest of Mohammed Badie and nine other leaders of the Muslim Brotherhood for inciting violence leading to the July 8 clash between security forces and protestors in which at least 51 protestors and 3 security officers died and hundreds of people were injured. Both sides claim the conflict was started by the other.

US inventories

The Energy Information Administration said July 10 commercial US crude inventories fell 9.9 million bbl to 373.9 million bbl in the week ended July 5, which included the US Independence Day holiday. That far exceeded Wall Street’s consensus for a 3.2 million bbl draw. Gasoline stocks dropped 2.6 million bbl to 221 million bbl in the same period, opposite market expectations of a 1 million bbl build. Inventories of finished gasoline increased while blending components decreased. Distillate fuel inventories jumped 3 million bbl to 123.8 million bbl last week, well above the anticipated 1 million bbl increase in that category.

Crude imports into the US were up 118,000 b/d to 7.5 million b/d last week. In the 4 weeks through July 5, US imports of crude averaged 7.9 million b/d, down 1.1 million b/d from the comparable period in 2012. Gasoline imports last week averaged 493,000 b/d; distillate fuel imports averaged 81,000 b/d.

The input of crude into US refineries increased 28,000 b/d to 16.1 million b/d last week with units operating at 92.4% of capacity. Gasoline production increased to 9.6 million b/d, and distillate fuel production increased to 5 million b/d.

Energy prices

The August contract for benchmark US light, sweet crudes bounced back 39¢ to $103.53/bbl July 9 on the New York Mercantile Exchange. The September contract recovered 29¢ to $103.31/bbl. On the US spot market, WTI at Cushing, Okla., was up 39¢ to $103.53/bbl.

Heating oil for August delivery took back 0.56¢ to $2.99/gal on NYMEX. Reformulated stock for oxygenate blending for the same month escalated 4.23¢ to $2.93/gal.

The August natural gas contract fell 8.4¢ to $3.66/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., continued to advance, up 3.5¢ to $3.70/MMbtu.

In London, the August IPE contract for North Sea Brent regained 38¢ to $107.81/bbl. Gas oil for July lost $4 to $909.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 10¢ to $104.06/bbl.

Contact Sam Fletcher at samf@ogjonline.com.