Market watch: API report shoves prices downward
Energy futures prices nose-dived in trading on the New York Mercantile Exchange and the International Petroleum Exchange Wednesday, in reaction to a bearish US stocks report. The American Petroleum Institute report detailed the tenth weekly rise in US crude and refined product stocks.
By the OGJ Online Staff
HOUSTON, June 28 -- Energy futures prices nose-dived in trading on the New York Mercantile Exchange Wednesday, in reaction to a bearish US stocks report.
The August contract for light, sweet crude, the US benchmark, fell $1.37 to $25.61/bbl, while the September contract stood at $25.72, down by $1.24.
Refined petroleum products also fell, with July home heating oil pulling back 3.25¢ to rest at 69.94¢/gal, while unleaded gasoline for the same month declined by 6.35¢ to rest at 71.44¢/gal.
NYMEX gas for July delivery dropped 21.5¢ to end at $3.18/Mcf.
The market tanked on a bearish inventory report by the American Petroleum Institute that was released after the end of trading on Tuesday.
A correction was widely expected, but the extent of the decline was much bigger because of an overreaction by traders.
Some analysts believed that the market had gone to an oversold state after the selloff and would probably bounce back during the next couple of sessions.
Apart from the bearish inventory report, dimming chances of an early resolution of the latest United Nations-Iraq tensions also cast their shadow on the market.
Meanwhile in London, Brent crude oil futures dropped dramatically Wednesday on the International Petroleum Exchange following the tenth weekly rise in US crude and refined product stocks reported by the API.
The rise in US gasoline stocks was more than double analysts' predictions and triggered a sharp fall in prices on the IPE and, later, a much steeper fall when NYMEX floor trading resumed.
Brokers said it now appeared that US refineries' output of gasoline would easily meet demand through the summer months, and predicted that prices would fall to test support at $25/bbl, and perhaps below that level in the next few weeks.
August Brent futures settled at $25.66/bbl, down $1.33 from the previous close. The day's high was $26.68 and the low was $25.24.
Also on the IPE, the July contract for natural gas fell 1¢ to the equivalent of $2.45/Mcf.
The Organization of Petroleum Exporting Countries' basket of seven crudes stood at $24.39, down from $25.61 the previous day.