"As a consequence, the Brent-West Texas Intermediate spread widened to as much as $6.54/bbl," said analysts at Barclay"s Capital, the investment banking division of Barclays Bank PLC,
"The decline in the WTI crude oil contract continues to stem from refinery issues creating a localized glut at the Cushing Hub in Oklahoma," said analysts in the Houston office of Raymond James & Associates Inc. "We continue to believe the Brent crude contract more accurately depicts the tight global oil market, along with underlying supply risks associated with Nigeria and Iran, and would expect this premium over WTI to dissipate once the localized glut is eliminated. Of note, this Memorial Day weekend [May 26-28] marks the start of the driving season; and with gasoline over $3/gal at the pump, traders will surely be focused on the effect (if any) on demand."
Barclay"s analysts concurred that "continued supply disruptions in
Chinese demand
Meanwhile, Chinese trade data for crude oil and refined products released overnight indicated strengthening Chinese demand. Net crude oil imports hit an all-time high of 3.48 million b/d, beating the previous record of 3.25 million b/d set last September. "Net product imports were also very strong with net imports of main products (gasoline, jet kerosine, diesel, and residual fuel oil) totaling 415,000 b/d, the highest since September 2006," said Barclay"s analysts.
"Nevertheless, China"s own reported refinery throughput of crude oil and output of products was relatively subdued in April, partially offsetting the growth in imports with the result that apparent consumption of major products was up just 3%," Barclay"s analysts said. "This is weaker than the average rate of consumption achieved so far this year, with cumulative demand for main products in the year to April now running at 3.7%. The disparity between rapidly increasing crude oil import levels and the modest increases seen in local refinery output suggests some element of crude oil stock building or an under-reporting of refinery production levels."
Energy prices
The July contract for benchmark
The June natural gas contract dropped 7.6¢ May 24 to $7.68/MMbtu on NYMEX. On the
In
The average price for the Organization of Petroleum Exporting Countries" basket of 11 benchmark crudes increased by 56¢ to $66.74/bbl on May 24.
PIN/OGJ.COM
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