Oil market fails to react to US data
September 29, 2005
Singapore - Oil prices were flat on Thursday in Asian trading as the market digested a US inventory report that showed crude stocks fell and gasoline stocks rose sharply.
Mid-afternoon in Singapore, light, sweet crude for November delivery was unchanged at $66.35 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract surged $1.28 on Wednesday in New York.
Gasoline fell nearly a cent to $2.3300 a gallon (3.8 litres) while heating oil inched marginally lower to $2.1380.
In London, Brent crude futures on the International Petroleum Exchange opened lower, with the November contract slipping 15 cents to $63.78 a barrel.
The US Energy Department's Energy Information Administration said Wednesday in its weekly petroleum supply report that crude inventories fell 2.4 million barrels from the previous week to 305.7 million barrels. They are about 11 percent higher than a year ago.
"The drop in crude oil was larger than expected, and that fuelled buying," said commodities analyst Mark Pervan at Daiwa Securities in Melbourne.
Gasoline stocks rose 4.4 million barrels from the previous week to 199.8 million, but are still about 6 percent below year-ago levels, the department said. They could shrink when refiners shift their focus to heating oil in the coming months.
"The increase in gasoline supplies could be partly be just the release of US strategic reserves being accounted for now," Pervan said. "Inadequate refining capacity is still a real issue to traders."
Crude prices are expected to remain high amid strong demand for distillates such as heating oil as the Northern Hemisphere winter approaches, and due to the slow-paced recovery of refineries after Hurricanes Rita and Katrina.
The department also said up to 15 percent of US refinery capacity could be offline for at least the next couple of weeks.
According to data released Wednesday by the US Minerals Management Service, all oil production at the US Gulf remained shut down, and suspended gas output rose to 80.27 percent from 78.56 percent the day before.
The region usually produces 1.5 million barrels of crude oil a day.
"The market is still very cautious about the damage cause by Hurricane Rita, and they're just digesting new information filtering in about damage to oil rigs in the Gulf of Mexico," Pervan said.
In the storm-devastated US Gulf area, about a dozen refineries in Texas and Louisiana have yet to restart after suffering damage and electricity outages from Hurricane Rita.
Chevron Corp. said the devastation caused by the two hurricanes is likely to be more serious than expected. The company estimated this tropical storm season will cost the company more than $350 million in third-quarter profit - the equivalent of more than 75,000 barrels of oil production - and that excludes the financial impact of Rita.
Exxon Mobil said late on Wednesday that it resumed production at some Gulf of Mexico platforms, but that the majority of suspended output remains offline.
In other market-related news, protesters in Mexico blocked access to a pumping station controlled by the country's state-run oil monopoly Petroleos Mexicanos, or Pemex, in the Gulf Coast state of Veracruz.
At least 300 residents from two communities affected by a 2004 oil spill prevented workers from entering or leaving the Mazumiapan pumping station in Santiago Tuxtla. A company spokesman said the station was operating normally despite the blockade.
Pemex is the world's third-largest oil-producing company, with crude output just under 3.4 million barrels a day and exports around 1.8 million barrels a day. - Sapa-AP
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