MARKET WATCH: NYMEX prices edge higher after Strait of Hormuz incident

Light, sweet oil prices settled moderately higher on the New York market Apr. 28 after briefly spiking to $57.73/bbl on news that the Iranian Revolutionary Guards Corp navy seized a western cargo ship in the Strait of Hormuz. Meanwhile, Brent crude oil fell modestly on the London market.

After touching its high for the trading session, the NYMEX oil contract for June delivery dropped on a statement from the US Department of Defense indicating that the cargo ship bore a Marshall Islands flag and had US citizens on board.

“The Pentagon plays it down, and now the market is cooling down,” Phil Flyann of Price Futures Group in Chicago told the Wall Street Journal. DOD also clarified that the confrontation happened in Iranian water.

The MV Maersk Tigris was boarded and taken to Bandar Abbas, a port used by the Iranian navy, said Maersk Line, adding the cargo ship’s crew was safe and still aboard the ship. Few details were available yet regarding why the ship was seized, said Maersk Line, which chartered it.

Traders refocused their attention on the weekly government inventory report of US oil and product supplies and also pending announcements from two government agencies.

The Federal Reserve was scheduled to end its 2-day policy meeting Apr. 29 with a statement and news conference. On the same day, the Securities and Exchange Commission was scheduled to propose rules aimed at helping stockholders determine how compensation for top executives of a publicly traded company compared with the company’s financial performance.

The Energy Information Administration said US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 1.9 million bbl for the week ended Apr. 24 from the previous week.

At 490.9 million bbl, oil inventories remain at the highest level for this time of year in about 80 years.

The weekly inventory gain was less than expected. Analysts surveyed by the WSJ said they expected crude inventories would rise 2.8 million bbl for the week ended Apr. 24.

Separately, the American Petroleum Institute said crude inventories at Cushing, Okla., dropped an estimated 162,000 bbl for the week ended Apr. 24, marking the first 2015 decline for Cushing storage while total US oil supplies still rose.

Gasoline top average range

Motor gasoline inventories increased 1.7 million bbl last week, and are above the upper limit of the average range, EIA said in its Petroleum Status Report.

Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased 100,000 bbl last week and are in the middle of the average range for this time of year.

Propane-propylene inventories rose 2.6 million bbl and are well above the upper limit of the average range.

US refinery inputs averaged 16.1 million b/d for the week ended Apr. 24, which was 118,000 b/d more than the previous week’s average. Refineries operated at 91.3% of capacity last week.

Gasoline production decreased last week, averaging about 9.4 million b/d. Distillate fuel production increased last week, averaging more than 4.8 million b/d.

US crude oil imports averaged more than 7.4 million b/d for the week ended Apr. 24, down by 319,000 b/d from the previous week.

Over the last 4 weeks, crude oil imports averaged more than 7.6 million b/d, which was 0.9% below the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, averaged 763,000 b/d, and distillate fuel imports averaged 135,000 b/d.

Energy prices

The New York Mercantile Exchange June crude oil contract rose 7¢ on Apr. 28 to $57.06/bbl. The July contract fell 9¢ to $58.53/bbl.

The natural gas contract for May climbed 2.7¢ to $2.52/MMbtu. The Henry Hub, La., gas price was $2.53/MMbtu, up 5¢.

Heating oil for May edged down less than a penny to remain at a rounded $1.92/gal. The price for reformulated gasoline stock for oxygenates blending for May edged down by 0.7¢ to a rounded $2/gal.

The June ICE contract for Brent crude fell 19¢ to $64.64/bbl, while the July contract fell 24¢ to $65.35/bbl. The ICE gas oil contract for May gained $1.75 to $586.50/tonne.

The average price for the OPEC’s basket of 12 benchmark crudes was $60.41/bbl on Apr. 28, down 65¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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

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