Crude futures fell on Thursday on news that United States gasoline stocks rose last week and as forecasts predicted Hurricane Wilma will likely avoid key US oil facilities along the Gulf of Mexico coast.
Light, sweet crude for November delivery slipped 44 cents to $61,97 a barrel on the New York Mercantile Exchange in Asian electronic trading. The contract, which expires on Thursday, closed at $62,41 on Wednesday, down 79 cents.
Gasoline fell half-a-cent to $1,6705 a gallon (3,8 litres), while heating oil fell 1,18 cents to $1,9016. Natural gas lost nearly a cent to $13,540 per 1 000 cubic feet.
Wilma, which weakened slightly to a still-powerful category-four hurricane, was centred in the north-western Caribbean Sea on Thursday. The Miami-based National Hurricane Centre warned it could reintensify into a category-five storm on Thursday, move into the Gulf of Mexico and then swerve east, toward Florida.
But some analysts said it is risky to assume the storm wouldn’t disrupt the ongoing recovery of oil and gas operations in the Gulf, and recalled that some traders had discounted the impact of hurricanes Katrina and Rita too early.
”We remain on storm watch,” says Phil Flynn of Alaron Trading Corp. ”The $75-a-barrel area for crude oil is still the target. If Wilma takes a turn toward the oil infrastructure, we could be there sooner rather than later.”
By Wednesday, about 65% of the Gulf’s oil production and about 52% of its natural-gas production remained blocked following the twin hurricanes that hit in August and September, according to the US Minerals Management Service. The US Gulf region provides 30% of oil and 21% of natural gas produced in the US.
The weekly US petroleum supply snapshot released on Wednesday provided some relief to prices as it showed an unexpected increase in gasoline inventories.
For the week ended October 14, US gasoline inventories increased by 2,9-million barrels to 195,7-million barrels, according to the US Department of Energy’s Energy Information Administration (EIA).
Gasoline stocks remain 4% lower than a year ago, but the build came as a surprise to analysts, who underestimated the improvement in US refining capacity — which rose about 4% to 79,1%, according to the EIA — and the amount of gasoline imports.
US crude inventories rose by 5,6-million barrels from the previous week to 312-million barrels. Crude stocks are nearly 12% higher than year-ago levels.
Analysts had been expecting crude inventories to rise by only about 1,5-million barrels, and gasoline and distillate inventories to fall, according to a Dow Jones survey of analysts.
US inventories of distillates — which include diesel and heating oil — dropped by 1,9-million barrels to 122,7-million barrels. They are more than 1% above year-ago levels, but in the lower half of the average range for this time of year.
Shell warned on Wednesday that US inventories of natural gas and heating oil may be under strain this winter, in the aftermath of hurricane damage to oil and gas facilities.
Pipeline damage has limited natural gas production and storage, while refineries have turned their focus to on-road fuels, rather than heating oil, Shell president John Hofmeister said in Houston, Texas.
”It’s going to take months, not weeks, to repair those pipelines,” he said, discussing the natural-gas conduits incapacitated by the storms. ”We’ve been humbled by these storms, but we’re pulling through.” — Sapa-AP