9 May 2007 - 09:15
  • News Code: 104178

HOUSTON -- Crude futures prices fell for the sixth consecutive trading session on the New York market, marking the longest loosing streak so far this year.

Gasoline futures also declined on speculation that US refiners will soon increase gasoline production ahead of the unofficial start of the summer driving season on the May 28 Memorial Day holiday. However, US gasoline inventories have declined for 12 consecutive weeks through Apr. 27 to the lowest level since the 2005 hurricane season and 7% below the 5-year average (OGJ Online, May 3, 2007).


The decline of gasoline prices with the restart of some refining was the leading indicator during the May 7 trading session in New York. But the market"s primary focus should turn to crude during May 8 trading with reports of new attacks by militants on oil installations in Nigeria. "We would expect to see more short covering starting to materialize when the attacks are confirmed by the operators," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland, on May 8.


Three major pipelines owned by Eni SPA in Nigeria reportedly shut down May 7 after attacks by local militants in the Niger Delta. "The lost pipelines reduce Nigerian exports another 200,000 b/d [due to closure of the Agip Brass Terminal] and come within a week of a previous attack on Chevron Corp."s Nigerian venture," said analysts in the Houston office of Raymond James & Associates Inc. Analysts said threats by militants to continue attacks on foreign oil facilities this month prompted Royal Dutch Shell PLC to postpone reopening its field until June, which had been producing nearly 500,000 b/d before an attack shut it down last year. Meanwhile, the US imports nearly 16% of its oil from Nigeria, which has now lost nearly a third of its production due to attacks by militants.


Energy prices

The June contract for benchmark US sweet, light crudes dropped 46¢ to $61.47/bbl May 7, the lowest closing since Mar. 21 on the New York Mercantile Exchange. The July contract lost 49¢ to $63.37/bbl.

On the US spot market, West Texas Intermediate at Cushing, Okla., was down 46¢ to $61.48/bbl. Heating oil for June delivery declined by 2.8¢ to $1.80/gal on NYMEX. The June contract for reformulated blend stock for oxygenate blending dropped 2.68¢ to $2.19/gal. "As far as gasoline is concerned," said analysts at Barclays Capital Commodities Research, London, "although US oil refiners will start ramping up their throughput rates in line with seasonal norms over the next few weeks, the sector remains extremely vulnerable to problems, and only yesterday, ExxonMobil Corp. said it would bring forward planned maintenance work at a 45,000 b/d coking unit at its 349,000 b/d refinery in Beaumont, Tex., due to a crack in a coker drum."


The June natural gas contract fell by 15.9¢ to $7.78/MMbtu on NYMEX. On the US spot market, however, natural gas at Henry Hub, La., gained 11.5¢ to $7.67/MMbtu. "The shoulder season doldrums have left us with very few near-term catalysts. Looking out over the summer, we are modeling a supply reduction of 750 MMcfd (1-2% of total domestic production) by the end of the summer season due to the recent deceleration in domestic drilling activity," Raymond James analysts said.


In London, the June IPE contract for North Sea Brent crude dropped 87¢ to $64.44/bbl The May contract for gas oil fell by $20.50 to $565.50/tonne.


The average price for the Organization of Petroleum Exporting Countries" basket of 11 benchmark crudes lost 90¢ to $61.89/bbl on May 7.



News Code 104178

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