Market watch: Big inventories trigger price plunge

By the OGJ Online Staff

HOUSTON, June 21 -- Energy futures prices plummeted on international markets Wednesday as the buildup of US inventories relieved fears of summer gasoline shortages.

The July contract for unleaded gasoline plunged to a 3-month low, down 6.34¢ to 79.03¢/gal on the New York Mercantile Exchange. It marked the biggest fall in gasoline values on the NYMEX in more than 2 years, analysts said.

The fall followed an American Petroleum Institute report late Tuesday of the ninth consecutive weekly increase in US stocks.

API said US gasoline stocks grew by 3.6 million bbl to 219.2 million bbl, 7% more than was available during the same period a year ago. US oil inventories rose by 1.4 million bbl to a total 313.6 million bbl last week, with distillate fuel inventories also up by 1.3 million to 108.8 million bbl.

The expiring July contract for benchmark US light, sweet crudes fell 98¢ to $26.50/bbl, while the August contract lost $1.16 to $26.48/bbl on the NYMEX. In after-hours electronic trading, both the August and September crude contracts continued their downward slides to $26.40/bbl and $26.50/bbl, respectively.

Home heating oil also was down 3.29¢ to 74.15¢/gal, while the July natural gas contract fell 24.7¢ to $3.73/Mcf.

In London, the August contract for North Sea Brent crude dropped 89¢ to $26.09/bbl on the International Petroleum Exchange. Analysts warned that market support at the $26/bbl level would likely be tested and broken within a day or so.

However, the July natural gas contract gained 1.7¢ to the equivalent of $2.62/Mcf on the IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes retreated 18¢ to $25.17/bbl Wednesday.