Crude Oil: what are last week’s results for the US?

Market Leader informed

The production of gasoline grew up to 9.1M barrel a day on average. The average daily production of fuel distillates, on the contrary, declined in volume down to 3.4M barrel a day.

·         The US crude oil inventories (excluding the strategic reserves) increased by 1.9M barrels as compared with the previous week, reaching 345,1M barrels, which is above average for this time of the year. Last week the gasoline inventories gained 4.7M barrels. Now the value is at the top of the average range. The distillate inventories lost in volume 0.3M barrels. The inventories of propane/propylene declined by 3.1M barrels, which is below the average value. The net inventories of oil products grew by 3.2M barrels.

·         Over the last month the oil product supplies have reached 19.1M barrels a day on average, which is 0.8% more than during the same period of 2010. Over the last month the average daily demand for gasoline has made up 8.6M barrels a day, which is 0.3% less than over the same period of 2010. The average demand for distillates over the same period of time (4 weeks) has been 3,7M barrels a day, which is 0.1% lower than in 2010.

·         The demand for jet-engine fuel has gained 1.6% in comparison with the same period in 2010.

·         Last week bearish sentiments were prevailing at the market of crude oil. However, after the report the decline of the crude oil futures slowed down. The data showed a slowdown in the pace of accumulating the oil reserves while the production and import declined. These data turned out to be lower than it had been expected by the market participants, which caused a slight price increase by $0.23 or 0.3% up to $86.71 per barrel at NYMEX. Despite the recent decline the price of WTI crude oil futures remains higher than last year because the volume of the oil inventories is higher as well. At the market of fuels (gasoline etc.) the situation was the opposite (bear dominated) as the reported data (inventories and production) turned out to be much better than expected while the demand declined, which slowed down the upward movement of the week, caused by the news about an accident at the refinery in Port Arthur.

·         The difference in prices of WTI and Brent types of oil keeps growing. On Feb 9^th 2011 the official price of WTI (Light Sweet) at NYMEX declined by $0,23 down to $86.71/b while the price of Brent at IСE Futures Europe gained $1.9 up to $101,82/b.

According to the analysts of the Department of Commodity Market Trading of Masterforex-V Academy, during the week the markets were pressed by the recent decision made by the People’s Bank of China  to increase the key interest rate (for the 2n time in the last 1.5 months). Besides, traders kept monitoring the situation in Egypt and the neighboring oil-exporting countries. Mass unrest and disorder raised concerns at the marketplaces. The accident at the refinery in Port Arthur made the entire US gasoline sector show a price increase. It is still not clear when the consequences will be eliminated. The extraction of oil at an oil platform in the Gulf of Mexico, supplying the Poseidon Oil Pipeline, was suspended, which also supported the price growth.   As a result the supply volume declined by more than 30% of the pipeline capacity – 300K barrels a day. Moreover on Tuesday the EU representatives reported that Somali pirates had captured an Italian oil tanker (capacity – 700K barrels). As a result, the supply stoppage supported the price growth even despite the fact that the market became less concerned about the situation in Egypt and that the OPEC states announced a possible increase in the volume of oil production.

In the long-term perspective the supply stoppage is of minor importance as the considerable reserves around the world make it possible to not worry about the temporary problems, but they do not provoke considerable growth. The WTI oil is supported by the fact that the spread between WTI and Brent has widened, which makes the former more attractive for buyers. The second factor is seasonal. It is connected with a slowdown in the pace at which the reserves grow. That is why we expect the price to move in a range.

 

 

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