MARKET WATCH: Crude prices continue to fall in mixed market

Crude prices continued to fall in the US futures market July 14, but other energy commodity prices inched higher.

Sam Fletcher
OGJ Senior Writer

HOUSTON, July 15 -- Crude prices continued to fall in the US futures market July 14, but other energy commodity prices inched higher.

The US Department of Commerce announced consumer prices climbed in June by the largest amount in 11 months. The main factor behind that increase was gasoline prices, up 7.4% in the biggest 1-month jump since Hurricane Katrina in September 2005.

“Crude prices fell…following weaker-than-expected consumer spending reports for June and slightly bearish data from the Mastercard SpendingPulse, indicating that gasoline consumption over the Fourth of July holiday weekend was down 4.3% year-over-year,” said analysts in the Houston office of Raymond James & Associates Inc. Typically, the analyst said, the Independence Day holiday represents the peak of the summer driving season.

Among energy commodities, West Texas Intermediate “stood out as an island of red in an ocean of green,” said Olivier Jakob at Petromatrix, Zug, Switzerland. “Equities have been holding, and the volatility ‘fear index’ is now at the lows of the year (25.02%). As fear is subsiding, the dollar is losing some of its ‘safe haven’ status and continues to slide, which in turn supports the rest of the commodity complex. WTI is now becoming a bit lonely in attracting selling pressure and the discount to Brent widens further as the European side of the Atlantic need to take in account strong physical differentials and a sharp narrowing of the contango.”

Jakob said, “The US retail sales numbers were nothing to cheer about, but equities are finding support on better-than-expected earnings reports.”

US inventories
The Energy Information Administration reported July 15 commercial crude inventories fell 2.8 million bbl to 344.5 million bbl during the week ended July 10, exceeding a Wall Street consensus of 2.1 million bbl. Gasoline stocks gained 1.5 million bbl to 214.6 million bbl, well beyond the 900,000 bbl increase Wall Street expected. Distillate fuel inventories increased 600,000 bbl to 159.3 million bbl, well below Wall Street’s expectations for a 2 million bbl build.

Imports of crude increased 325,000 b/d to 9.5 million b/d in the same week. For 4 weeks through July 10, crude imports were down 675,000 b/d. to an average 9.4 million b/d, compared with the same period a year ago.

The input of crude into US refining increased 139,000 b/d to 15.1 million b/d, with units operating at 87.9% of capacity last week. Gasoline production fell to 9 million b/d. Distillate fuel production was relatively unchanged at 4 million b/d.

Energy prices
The August and September contracts for benchmark US light, sweet crudes dropped 17¢ each on July 14, closing at $59.52/bbl and $60.39/bbl, respectively, on the New York Mercantile Exchange. On the US spot market, WTI at Cushing, Okla., also was down 17¢ to $59.52/bbl. However, heating oil gained 0.81¢ to $1.51/gal on NYMEX. Reformulated blend stock for oxygenate blending (RBOB) for the same month advanced 0.72¢ to $1.65/gal.

The August natural gas contract jumped 16.6¢ to $3.43/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was up 10.5¢ to $3.29/MMbtu.

In London, the August IPE contract for North Sea Brent crude gained 17¢ to $60.86/bbl, widening its lead over WTI. Gas oil for August increased $7.75 to $491.25/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes jumped by $1.21 to $60.87/bbl on July 14.

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