MARKET WATCH: Oil markets negative after big drop in previous session
Oil markets generally were down Apr. 16 with front-month crude essentially flat after dropping to its lowest price of the year in the previous session on the New York market and North Sea Brent closing below $100/bbl for the first time since July.
“Oil markets struggled to move into the black after an early sell-off,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. The markets were “under attack again” in early trading Apr. 17, particularly Brent, “as participants clearly remain uncertain about the future of global demand, given the uncertainty introduced this week surrounding China’s growth prospects—the world’s second largest consumer,” he said.
The economic slowdown in the first quarter of this year “has perhaps got many thinking whether more downside is in the offing for the coming quarters. In addition, the upward trajectory of inflation adds further uncertainty,” Ground said.
US inventories
The Energy Information Administration said Apr. 17 commercial US crude inventories fell 1.2 million bbl to 387.6 million bbl in the week ended Apr. 12, opposite Wall Street’s consensus for a 1.2 million bbl gain. Gasoline stocks declined 600,000 bbl to 221.7 million bbl, short of the 800,000 bbl drop analysts expected. Finished gasoline increased while blending components decreased. Inventories of distillate fuel jumped 2.4 million bbl to 115.2 million bbl. Analysts had projected a 400,000 bbl decline.
Imports of crude into the US were down 289,000 b/d to 7.4 million b/d in that same period. In the 4 weeks through Apr. 12, US imports of crude averaged 7.8 million b/d, down 1.3 million b/d from the comparable period in 2012. Gasoline imports last week averaged 606,000 b/d while distillate fuel imports averaged 337,000 b/d.
The input of crude into US refineries was down 40,000 b/d to 15.1 million b/d last week with units operating at 86.3% of capacity. Gasoline production increased to 8.9 million b/d, while distillate fuel production decreased to 4.5 million b/d.
Energy prices
After falling to the lowest closing this year in the previous session, the May contract for benchmark US light, sweet crudes regained just 1¢ to $88.72/bbl Apr. 16 on the New York Mercantile Exchange. The June contract remained unchanged at $89.03/bbl. Subsequent monthly contracts were essentially flat through April 2014. On the US spot market, West Texas Intermediate at Cushing, Okla., matched the front-month crude futures contract’s gain of 1¢ to $88.72/bbl.
Heating oil for May delivery continued its downward trend, declining 2.27¢ to $2.81/gal on NYMEX. However, reformulated stock for oxygenate blending for the same month regained 2.42¢ to $2.78/gal.
The May natural gas contract recovered 2.3¢ to $4.16/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., ended its 4-session rally down 5.3¢ to $4.19/MMbtu.
In London, the new front-month June IPE contract for North Sea Brent traded as low as $98/bbl before closing at $99.91/bbl, down 72¢ for the day. Gas oil for May lost $11.50 to $835.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes dropped $1.41 to $97.15/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.