MARKET WATCH: NYMEX crude oil prices reach 2015 high

Crude oil prices surged more than $3/bbl on the New York market Feb. 3, closing at the highest level so far this year, but some analysts believe the oil price rout might not be over yet. One analyst said the Feb. 4 release of the weekly US government report on oil and product inventories would prove interesting.

“I think it’s way too early to turn positive on prices,” Ole Hansen, head of commodity strategy at Saxo Bank, told OGJ’s Unconventional Oil & Gas Report in a telephone interview from his Copenhagen office Feb. 3. “We’re in this cat-and-mouse game now. Prices drop on the inventory report on Wednesday and rally on the rig count on Friday.”

Meanwhile, BP PLC announced plans Feb. 3 to trim spending on new projects and to delay some planned investments (OGJ Online, Feb. 3, 2015). BP joins many other oil and gas companies reducing their drilling budgets for 2015.

Analysts were monitoring efforts to resolve a strike at several US refineries, saying that retail gasoline prices are likely to remain at their cheapest levels in almost 6 years (OGJ Online, Feb. 2, 2015).

On Feb. 4, the Energy Information Administration said US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by an estimated 6.3 million bbl as of Jan. 30 compared with the previous week.

At 413.1 million bbl, US crude oil inventories remain at the highest level for this time of year in at least the last 80 years, EIA said.

Gasoline inventories climb

Total motor gasoline inventories increased by 2.3 million bbl for the week ended Jan. 30, and are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week.

Distillate fuel inventories increased by 1.8 million bbl last week and are in the middle of the average range for this time of year. Propane-propylene inventories fell 2.1 million bbl last week but are well above the upper limit of the average range.

US refinery inputs averaged more than 15.5 million b/d during the week ended Jan. 30, which was 288,000 b/d more than the previous week’s average. Refineries operated at 89.9% of capacity last week. Gasoline production decreased, averaging 9.1 million b/d. Distillate fuel production decreased last week, averaging about 4.7 million b/d.

US crude oil imports averaged 7.4 million b/d last week, down 35,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged 7.4 million b/d, which was 0.5% above the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 672,000 b/d while distillate fuel imports averaged 413,000 b/d last week.

Energy prices

The New York Mercantile Exchange March crude oil contract gained $3.48 on Feb. 3, closing at $53.05/bbl. That was the highest level since Dec. 31, 2014. The April contract rose $3.41 to $53.86/bbl.

The NYMEX gas contract for March rose 7¢ to $2.75/MMbtu. On the cash gas market, the Henry Hub, La., hub gas price rose 4¢ to $2.67/MMbtu on Feb. 3.

Heating oil for March rose 8.9¢ to a rounded $1.85/gal. Reformulated gasoline stock for oxygenate blending for March was up 5.7¢ to a rounded $1.60/gal.

The March ICE contract for Brent crude oil jumped $3.16 to settle at $57.91/bbl. Meanwhile, the April Brent contract was up $3.26 to $59/bbl. The ICE gas oil contract for February rose $24.50 to $536.75/tonne.

The average price for OPEC’s basket of 12 benchmark crudes on Feb. 3 was $51.77/bbl, up $3.58 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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