MARKET WATCH: Oil prices held steady on NYMEX awaiting crude inventory

Oil prices held fairly steady on the New York market in Dec. 16 trading while Brent crude oil prices fell by more than $1/bbl on the London market. The average price for the Organization of Petroleum Exporting Countries basket of 12 crudes dipped under $56/bbl.

Oil prices held fairly steady on the New York market in Dec. 16 trading while Brent crude oil prices fell by more than $1/bbl on the London market. The average price for the Organization of Petroleum Exporting Countries basket of 12 crudes dipped under $56/bbl.

Morgan Stanley analysts said Brent has tumbled 40% during 3 months, which has only happened 3 times in 24 years. They suggested crude oil price momentum is likely to continue downward until there is a change in physical supplies such as reduced world oil production.

Jeffrey Currie, head of commodities research at Goldman Sachs Group, issued a note saying volatility “will likely remain high with risks skewed to the downside as the market searches for a new equilibrium.”

Currie said, “As the industry takes the fat out of the system that was built up over the past decade, the new equilibrium price is dropping sharply,” adding that “where it settles is unknown right now.”

US oil supplies drop

For the week ended Dec. 12, the Energy Information Administration reported US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased 800,000 bbl from the previous week.

At 379.9 million bbl, crude oil inventories are above the upper limit of the average range for this time of year, the weekly petroleum status report showed.

Total motor gasoline inventories increased 5.3 million bbl last week, and are well above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week.

Distillate fuel inventories decreased by 200,000 bbl and are in the lower half of the average range for this time of year. Propane-propylene inventories fell 800,000 bbl for the week ended Dec. 12 but are well above the upper limit of the average range.

US refinery inputs averaged 16.3 million b/d, which was down 326,000 b/d from the average for the week ended Dec. 5. Meanwhile for the week of Dec. 12, refineries operated at 93.5% of capacity.

Gasoline production increased last week, averaging about 9.7 million b/d. Distillate fuel production decreased slightly last week, averaging 5.2 million b/d.

US crude oil imports averaged 7.1 million b/d last week, down 564,000 b/d. Over the last 4 weeks, crude oil imports averaged 7.4 million b/d, 1.9% below the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 773,000 b/d. Distillate fuel imports averaged 139,000 b/d.

Energy prices

The New York Mercantile Exchange January crude oil contract gained 2¢ on Dec. 16, closing at $55.93/bbl. The February contract was unchanged at $56.26/bbl.

The natural gas contract for January settled down 10¢ to a rounded $3.62/MMbtu. The cash gas price at Henry Hub, La., dropped 10¢ to $3.56/MMbtu on Dec. 16.

Heating oil for January delivery dropped 4¢ to a rounded $1.96/gal. Reformulated gasoline stock for oxygenate blending for January was down by 3.5¢ to a rounded $1.54/gal.

The January 2015 ICE contract for Brent crude oil fell $1.20 to $59.86/bbl. The February contract dropped $1.20 to $60.01/bbl. The ICE gas oil contract for December declined by $4.75 to $551/tonne.

The average price for OPEC’s basket of 12 benchmark crudes on Dec. 16 was $55.91/bbl, down $2.01.

Contact Paula Dittrick at paulad@ogjonline.com.

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.

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