MARKET WATCH: NYMEX, Brent oil prices climb more than $1/bbl ahead of US inventory report

Energy prices climbed more than $1/bbl on the New York and London markets on Jan. 27 ahead of the weekly US government report which showed an increase in oil and product supplies.

Barclays Commodities Research issued a note entitled “The Blue Drum: Everybody hurts,” saying Barclays analysts now expect US light, sweet crude will average $44/bbl this year compared with its previous 2015 forecast of $72/bbl.

“After averaging very low levels during 2015, we expect prices to rebound to $60[/bbl] in 2016,” said Michael Cohen of Barclays. “Low prices will likely curb non-OPEC supply growth.”

The Jan. 28 petroleum status report showed another increase in oil and products for the week ended Jan. 23.

The Energy Information Administration estimated US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 8.9 million bbl from the previous week. At 406.7 million bbl, US crude oil inventories are at the highest level for this time of year in at least the last 80 years.

Total motor gasoline inventories decreased 2.6 million bbl, and EIA said the current level remains well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week.

Distillate fuel inventories decreased 3.9 million bbl last week and are in the lower half of the average range for this time of year. Propane-propylene inventories fell 1.9 million bbl, but that level remains well above the upper limit of the average range for this time of year.

US refinery inputs averaged 15.3 million b/d during the week ended Jan. 23, which was 347,000 b/d more than the previous week’s average. Refineries operated at 88% of capacity.

Gasoline production decreased last week, averaging 9.2 million b/d. Distillate fuel production decreased last week, averaging more than 4.7 million b/d. US crude oil imports averaged more than 7.4 million b/d, up 204,000 b/d from the previous week.

Over the last 4 weeks, crude oil imports averaged more than 7.2 million b/d, 4.8% below the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 597,000 b/d while distillate fuel imports averaged 439,000 b/d.

Energy prices

The New York Mercantile Exchange March crude oil contract climbed $1.08 on Jan. 27, closing at $46.23/bbl. The April contract rose $1.07 to $46.95/bbl.

The NYMEX gas contract for February was up 10¢ to a rounded $2.98/MMbtu. Meanwhile, the cash gas price at Henry Hub, La., was up 2¢ to $2.95/MMbtu on Jan. 27.

Heating oil for February climbed 2.3¢ to a rounded $1.66/gal. Reformulated gasoline stock for oxygenate blending for February was up 3¢ to a rounded $1.35/gal.

The March ICE contract for Brent crude oil rose $1.44 to settle at $49.60/bbl. The April contract climbed $1.36 to $50.74/bbl. The ICE gas oil contract for February held unchanged at $475.25/tonne.

The average price for OPEC’s basket of 12 benchmark crudes on Jan. 27 was $43.24/bbl, up 34¢ from the previous day.

Contact Paula Dittrick at paulad@ogjonline.com.

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

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