MARKET WATCH: NYMEX oil prices drop below $58/bbl before inventory report

US light, sweet crude oil prices dropped on the New York market May 27 pending release of the weekly government report on oil and product inventories, which came a day later than normal because of this week’s Memorial Day holiday.

The Energy Information Administration reported on May 28 that US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased 2.8 million bbl for the week ended May 22 compared with the previous week.

Inventories have fallen for 4 consecutive weeks. At 479.4 million bbl, crude oil inventories remain at the highest level for this time of year in at least the last 80 years, the Petroleum Status Report said.

The dollar continued to gain strength against other currencies on May 28, hitting a 12-year high against the Japanese yen. Federal Reserve Chair Janet Yellen said May 22 that she anticipates the Fed will raise interest rates sometime this year.

EIA said refinery inputs averaged 16.5 million b/d for the week ended May 22, which was 237,000 b/d more than the previous week’s average. Refineries operated at 93.6% of capacity last week. Gasoline production increased, averaging 10.2 million b/d. Distillate fuel production increased last week, averaging 4.9 million b/d.

US crude oil imports averaged 6.7 million b/d for the week ended May 22, down 503,000 b/d from the previous week. During the last 4 weeks, crude oil imports averaged more than 6.8 million b/d, 3.4% below the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 775,000 b/d, and distillate fuel imports averaged 248,000 b/d, EIA said.

Energy prices

The July crude oil contract on the New York Mercantile Exchange dropped 52¢ on May 27 to settle at $57.51/bbl. The August contract fell 62¢ to settle at $57.86/bbl.

The natural gas contract for June declined less than a penny to a rounded $2.81/MMbtu. The Henry Hub, La., gas price held steady at $2.82/MMbtu.

Heating oil for June fell 4¢ a rounded $1.86/gal. The price for reformulated gasoline stock for oxygenates blending for June decreased 5.4¢ to a rounded $1.94/gal.

The July ICE contract for Brent crude fell $1.66 to $62.06/bbl while the August contract dropped $1.65 to $62.66/bbl, respectively. The ICE gas oil contract for June was down $9 to $576.25/tonne.

The average price for the OPEC’s basket of 12 benchmark crudes for May 27 was $60.43/bbl, down 30¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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

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