Light, sweet crude prices for February delivery dropped nearly $1 on the New York market Jan. 12 settling at $30.44/bbl after touching a low of $29.93/bbl for the trading session. The Brent contract for February delivery settled at $30.86/bbl on the London market Jan. 12, up from its session’s low of $30.34/bbl.
Carl Larry, Frost & Sullivan director of oil and gas in Mountain View, Calif., noted that US oil prices have returned to levels not seen for 12 years.
“Before proclaiming the sky is falling, it’s important to keep it all in context,” Larry said. “Yes, the last time prices were under $30[/bbl] was in 2004, but it’s important to remember that even though that was the price level in 2004, the actual average price for US West Texas Intermediate crude was $41.47[/bbl].”
Larry noted 2004 oil prices bounced back from January lows of about $30/bbl to reach $43.45/bbl by yearend and then climbed to $147/bbl in 2008. He acknowledged world oil supply levels and strategy by the Organization of Petroleum Exporting Countries was different in 2004 compared with 2016.
Anthony Starkey, oil products energy analysis manager with Platts Bentek, said, “Obviously anything can happen to oil prices in the near term. The sentiment is very poor, and the trend clearly has a downward bias. That said, there is little fundamental reason for prices to crash further.”
Platts Bentek is an analytics and forecasting unit of Platts, a global provider of energy and commodities information.
“Bentek expects oil prices in 2016 to average below those in 2015, with a gradual increase in price through the second half of the year,” Starkey said. “Late 2017 and into 2018 is when we expect any real meaningful price move higher could possibly take place.”
Oil prices gained on the New York market in early trading on Jan. 13 as analysts and traders awaited release of the weekly government inventory report on US crude and product supplies, which showed an increase in oil and gasoline supplies.
The Energy Information Administration estimated US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 200,000 bbl for the week ended Jan. 8 from the previous week. The latest total was 482.6 million bbl, the Petroleum Status Report said.
The American Petroleum Institute reported that its own calculations showed a decline of 3.9 million bbl for the week ended Jan.8. Analysts polled by The Wall Street Journal before release of the inventory had said they expected the EIA report would show an increase of 2.1 million bbl.
Gasoline supplies increase
Total US motor gasoline inventories increased 8.4 million bbl, which EIA said was above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased for the week ended Jan. 8.
Distillate fuel inventories increased 6.1 million bbl, and EIA said that level was above the upper limit of the average range for this time of year. Propane-propylene inventories fell 4.5 million bbl, but EIA said levels are well above the upper limit of the average range.
US refinery inputs averaged more than 16.4 million b/d for the week ended Jan. 8, which was 194,000 b/d less than the previous week’s average. Refineries operated at 91.2% of capacity.
Gasoline production increased, averaging more than 8.8 million b/d. Distillate fuel production decreased last week, averaging about 4.8 million b/d.
Crude oil imports averaged 8.2 million b/d, up 678,000 b/d from the previous week. During the last 4 weeks, oil imports averaged more than 7.7 million b/d, 4.1% above the same 4-week period last year. Total motor gasoline imports, including finished gasoline and gasoline blending components, averaged 446,000 b/d for the week ended Jan. 8. Distillate fuel imports averaged 154,000 b/d.
The NYMEX natural gas contract for February declined nearly 14¢ to a rounded $2.26/MMbtu. The Henry Hub gas price dropped 15¢ to $2.38/MMbtu on Jan. 12.
Heating oil for February delivery dropped a rounded 2.5¢ to 99¢/gal. The price for reformulated gasoline stock for oxygenates blending for February was down by nearly 3¢ to a rounded $1.08/gal.
The February ICE contract for Brent crude fell 69¢ to $30.86/bbl, and the March contract was down 93¢ to $30.95/bbl. The ICE gas oil contract was $292.50/tonne on Jan. 12, down $6.75.
The average price for OPEC’s basket of 12 benchmark crudes for Jan. 12 was $25.76/bbl, down $1.31.
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