RSSOil Experts: No Cigar This Week
By Brad Zigler | September 04, 2008 | 12:32 PM | 4 Comments
Oil industry analysts were fanned again this week by a seemingly unpredictable market. When the U.S. Energy Department's Energy Information Administration's weekly supply report was published this morning, you could hear the crumbling of paper and the gnashing of teeth on the oil trading desks.
The EIA says domestic crude oil inventories fell by a whopping 1.9 million barrels from the previous week, blowing away oil patch experts' forecast for a 300,000-arrel decline.
Ahead of the report, crude oil prices ticked higher on short covering as the market followed through on Wednesday's floor session. October crude futures opened 6 cents higher at $109.41 per barrel this morning, but the United States Oil Fund (AMEX: USO) ETF started its day at $88.31, off 13 cents from Wednesday's close.
Refineries' operations stepped up last week, despite analysts' calls for a modest slowdown. Usage was tracked at 88.7% of operable capacity, but the consensus forecast was an 87.2% utilization rate. Gasoline production rose to an average 9.4 million barrels per day as distillate fuel production, including diesel and heating oil, nudged up to an average 4.5 million barrels per day.
Gasoline stocks dipped by an unexpectedly light 1-million-barrel margin last week. The Street was expecting a 1.5-million-barrel drawdown. Overall, gasoline demand has declined 1.6% since this time last year, according to Energy Department tallies.
The biggest prognostication goof, though, was made in the distillate fuels numbers. In spite of experts' calls for a 700,000-barrel increase in stocks, inventories fell by 400,000 barrels last week.
Amid all this, refining margins firmed up over the past week, potentially boosting oil company operating profits. Margins derived from the nearby one-month crack spread (for an explanation of the crack spread, see our "Time For Crack Spreads?" feature) were 9% at the close Wednesday. A week ago, the spread was clocked at 7.8%. Year-ago margins were 14.8%.
Crude Oil Prices V. Refining Margins
In another report, the EIA said natural gas in storage in the U.S. rose to 2.85 trillion cubic feet, up 90 billion cubic feet from the previous week's level. Still, working stocks are 3.7% below the five-year average for this time of year.
Natural gas futures traded slightly higher going into the report, cutting into the energy premium commanded by crude oil. The margin shrunk over the first two days of post-Labor day trading (for a discussion on the seasonality in the spread, see our feature, "Spreading Oil and Natural Gas"). Crude's energy-equivalent premium price was $11.964 per mmBTU (million British Thermal Unit) heading into the holiday weekend, but dropped nearly 31 cents on Monday and another 8 cents on Tuesday.
Margins in the alternative fuels sector are rebounding as ethanol prices have risen. The gross corn crush (an explanation of the corn crush is featured in "Are We At The Bottom Of The Ethanol Barrel?") finished out last week at 83.5 cents per bushel. Adjusted for the cost of natural gas used in refining, the crush was 72 cents per bushel. A year before, the net crush was $1.35 per bushel.
Ethanol And Related Prices
| 
|
Comments (4) | Related Topics » Energy | Commodities | Crude | Traders' Talk | Nat Gas | Alternative Energy
|
|
|
|
