Oil, Gas & Distillate Inventories
3:52 PM ET Nov. 30, 2005
SAN FRANCISCO (MarketWatch) -- Crude futures reclaimed the 57 usd-a-barrel level and natural-gas prices jumped over 7 pct Wednesday, supported by renewed winter-weather concerns and the first significant drop in US crude supplies of the season.
But crude prices lost 5 pct for the month, and natural-gas prices ended modestly lower from their close at the end of October, suffering from the daily volatility brought on by traders taking their cues from changing weather forecasts and supply updates.
January crude closed up 82 cents at 57.32 usd a barrel on the New York Mercantile Exchange, after trading as low as 56 usd, its lowest level since June 2. The contract closed 3.07 usd below their month-ago level.
December heating oil rose 0.67 cent to finish at 1.6164 usd a gallon after a low of 1.5875 usd, a level not seen since June 1. December unleaded gasoline closed at 1.4249 usd a gallon, up 2.98 cents. They closed below the month-ago level of 1.8239 usd for heating oil and 1.5901 usd for unleaded.
January became the lead-month contract for the products at the session's close. January heating oil tacked on 1.77 cents to end at 1.6897 usd a gallon and January unleaded gasoline closed at 1.4971 usd a gallon, up 4.15 cents.
At the same time, natural gas for January delivery climbed 85.1 cents to end at 12.587 usd per million British thermal units. It reached a nearly two-week high of 12.65 usd earlier.
"Clearly producers have been ramping up production in heating-oil supplies and got lucky they had a little break in the psycho weather patterns," said veteran commodities trader Kevin Kerr.
"But the big mistake is now the crude supplies are dropping, and once cold weather hits, supplies of heating oil and natural gas are going to take a hit and the crude supply will be hard-pressed to keep up," he said.
Kerr edits the Global Resources Trader, a newsletter service of MarketWatch, the publisher of this report.
Adding strength to Wednesday's rally were forecasts for colder weather in the Northeast from Accuweather.com.
"Colder temperatures ahead may help prevent further losses in heating oil over the near term, but this critical seasonal sector looks increasingly well-supplied going into the winter," said Tim Evans, a senior analyst at IFR Markets.
The drop in crude inventories reported by the Energy Department Wednesday translated into the biggest increase in distillate stocks since July.
On Wednesday, the government agency said crude inventories fell 4.2 mln barrels for the week ended Nov 25. It pegged its tally at 317.6 mln barrels -- 10.3 pct above the year-ago level. The decline was bigger than most analysts expected.
Crude supplies were down 4.1 mln barrels at 321.9 mln, according to the American Petroleum Institute, which issued a separate report Wednesday.
But distillate inventories, which include heating oil, added 3.4 mln barrels to total 127.9 mln, the government data showed. Estimates were mixed. Supplies are now 4.7 pct above last year's level.
The government report hasn't showed an increase in inventories this big since the week ended July 1, when distillate supplies rose 4 mln.
The API reported an increase of 4.5 mln barrels to total 132.6 mln.
Motor gasoline stocks fell 500,000 barrels to 199.9 mln -- 4.8 pct below the year-ago level, the Energy Department said. They were down 1.1 mln at 201.5 mln, according to the API.
The increase in distillate supplies came on the heels of a rise in US refinery production utilization to 89.3 pct from 88.1 pct in the previous week, according to government data.
Refinery crude-oil inputs averaged more than 15.1 mln barrels a day last week, up 239,000 barrels from the previous week, the data showed.
And while gasoline production fell slightly to 9 mln barrels a day, distillate-fuel output rose "substantially" to average almost 4.2 mln barrels a day, the Energy Department said.
Total products supplied over the four-week period ended Nov 25, a key gauge of consumption, fell 1.6% below the year-ago level to average 20.5 mln barrels per day.
Gasoline demand was 1.3 pct above the same time a year ago at 9.2 mln barrels a day for the four-week period. Distillate-fuel demand averaged almost 4.1 mln barrels a day, 0.1 pct above last year's level, according to government figures.
Looking ahead, crude-oil prices should remain above the 55 usd level for "at least several more weeks," said John Person, president of National Futures Advisory Service.
"It is officially the end of the hurricane season today -- now we will see how fast repairs can be made for the Gulf Coast refineries and if demand will ease due to mild temperatures in the Northeast," he said, pointing out that much of that region depends on heating oil.
Meanwhile, the natural-gas market awaited its own US update on supplies due out Thursday morning.
Analysts at Platts predict that natural-gas inventories fell 48 bln cubic feet last week, while IFR Market's forecast puts the estimated decline at 35-45 bln cubic feet.
In equities, energy shares edged higher Wednesday, with the Oil Service Index setting the pace among the sector benchmarks.
Elsewhere, gold futures fell over 4 usd an ounce, but they still ended the month up almost 4 pct.
Taking a broad measure of the commodity-futures markets, the Reuters/Jefferies CRB Index stood at 314.3 points, up 1 pct on the New York Board of Trade.
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