MARKET WATCH: Oil prices rise as data shows large US gasoline inventory drawdown

US light, sweet crude oil prices were up Apr. 10 on the New York market, with both the May and June contracts settling above $64/bbl following a steep drop in gasoline stocks as reported by the US Energy Information Administration. While crude inventories for the week ended Apr. 5 were up by 7 million bbl from the previous week, news of a gasoline inventories drawdown of 7.7 million bbl—the largest since September 2017—was in sharp contrast to analysts’ expectations of a drop closer to 2 million bbl.

US light, sweet crude oil prices were up Apr. 10 on the New York market, with both the May and June contracts settling above $64/bbl following a steep drop in gasoline stocks as reported by the US Energy Information Administration.

While crude inventories for the week ended Apr. 5 were up by 7 million bbl from the previous week, news of a gasoline inventories drawdown of 7.7 million bbl—the largest since September 2017—was in sharp contrast to analysts’ expectations of a drop closer to 2 million bbl (OGJ Online, Apr. 11, 2019).

“Even though the crude oil inventory rise was nearly equal in size, the focus of the complex, as we head into peak summer driving season, is gasoline,” said John Kilduff, a partner at Again Capital LLC in New York.

Supply cuts by members of the Organization of Petroleum Exporting Countries and other non-OPEC producers (OPEC+), coupled with US sanctions on Iran and Venezuela, also buoyed prices.

“OPEC+ has more than answered the call, with the group cutting production by 300,000 b/d more than the previously agreed-upon levels. While several countries such as Nigeria and Algeria remain short on compliance, the Saudis have compensated beyond their call of duty by pumping 300,000 b/d below quota and taking their exports down to 7 million b/d. Our baseline view remains that OPEC will announce at its June meeting the intention to extend the output cuts through the balance of the year to clean up balances and shore up pricing to levels closer to fiscal break-evens, which for many countries reside in the $75–80/bbl price range or higher,” RBC Capital Markets analysts said in a note Apr. 11.

Energy prices

The May contract for light, sweet crude oil on the New York Mercantile Exchange gained 63¢ to settle at $64.61/bbl on Apr. 10. The price for June delivery gained 69¢ to settle at $64.65/bbl.

NYMEX natural gas for May edged up less than 1¢ to remain at a rounded $2.70/MMbtu.

Ultralow-sulfur diesel for May gained 4¢ to a rounded $2.09/gal. The NYMEX reformulated gasoline blendstock for May rose 7¢ to settle at a rounded $2.07/gal.

Brent crude for gained $1.12 to settle at $71.73/bbl and the July price gained $1.14 to settle at $71.30/bbl.

The gas oil contract for April gained $4.75 to settle at $627/tonne on Apr. 10.

OPEC’s basket of crudes for Apr. 10 was $70.31/bbl, down 4¢.

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