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 [email protected].
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.
