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MARKET SUMMARY
U.S. petroleum market movements were mixed last week, with crude oil and distillate spot and futures prices ended lower for the week, due solely to Thursday's sharp downward correction. Wednesday's WTI spot peak at $16.19 per barrel was the highest since May 1, with prices rising nearly $3.50 per barrel since mid-August. Hurricane Georges resulted in the temporary shut-in of a reported 70 percent of offshore Gulf oil and gas production, but the upward price influence was tempered by the first U.S. stockbuild since the first week of August. Most facilities were back in operation by week's end.
Crude oil - prices moved gradually higher for most of the week, then eased somewhat on Friday amid perceptions that the market had been overbought in anticipation of Hurricane Georges. Markets firmed slightly through Tuesday, ahead of October NYMEX expiration and in anticipation of a moderate inventory decline from the previous week. Despite the stockdraw coming in at over 9 million barrels, prices barely moved on Wednesday, and market activity on Thursday and Friday was dominated by the approaching storm. Weather-related shutdowns over the past 4 weeks have helped to drive U.S. stocks down over 28 million barrels since early August.
Gasoline - prices gained modestly for the week, as the effects of lower crude oil prices were countered by a larger-than-expected stockdraw for the previous week and delays in restarting two Gulf Coast refineries due to storm damage. Shortcovering ahead of October NYMEX contract expiration helped lift prices moderately on Wednesday.
Distillate - generally followed crude oil price movements, but lost ground slightly as a fourth straight weekly stockbuild left inventories over 15 million barrels above year-ago levels.
CHRONOLOGY OF RECENT MARKET EVENTS
10/2 - rising - prices rose market-wide, partially rebounding from Thursday's sharp selloff. Shortcovering was largely credited to the meeting in Cancun of oil ministers from Saudi Arabia, Venezuela, and Mexico. Gasoline was particularly strong, with two refineries still shut down due to storm damage.10/1 - falling - spot and futures prices dropped solidly across the board, in a broad-based selloff characterized as a correction to recent bullishness. Spot WTI crude oil had reached a 5-month high through Wednesday after climbing since mid-August, and was seen as overvalued.
9/30 - rising - all prices rose, led by products, despite larger-than-expected stockbuilds in crude oil and distillates in the weekly API and EIA supply reports. The October NYMEX product futures contracts expired uneventfully, while recovery from Hurricane Georges continued.
9/29 - mixed - most prices moved moderately higher in the wake of Hurricane Georges, led by crude oil, as operators in the Gulf Coast area worked to restart production and refining facilities. Two significant refineries remained closed due to flooding.
9/28 - mixed - crude oil and distillate prices partially recovered from early losses, but finished lower, despite Hurricane Georges' landfall near Biloxi, Mississippi, temporarily shutting in most offshore oil and gas facilities in the Gulf of Mexico. Gasoline closed slightly higher, due to refinery shutdowns caused by the storm.
9/25 - falling - spot and futures prices turned lower, partially offsetting Thursday's gains, in pre-weekend selling amid a lessening of concern about Hurricane Georges. The storm still appeared headed for landfall on the eastern portion of the Gulf Coast, likely leading to a repeat of precautionary shutdowns of production, transportation, and refining facilities, but no lasting damage.
9/24 - rising - all prices rose moderately, supported by concerns over the approach of Hurricane Georges toward the Gulf Coast. While predictions of landfall still leaned toward the East, away from most oil and gas facilities, precautionary shutdowns remained likely.
9/23 - mixed - most prices ended lower, in spite of a huge crude oil stockdraw in the weekly supply reports. An unexpected gasoline stockbuild, accompanied by a sharp post-Labor Day drop in implied demand, countered the otherwise supportive crude oil data.
9/22 - rising - gasoline led all prices higher ahead of the weekly API and EIA supply reports. Crude oil rose modestly ahead of October NYMEX contract expiration at the close, and in anticipation of a stockdraw in the weekly data.
9/21 - mixed - crude oil price movements were mixed, and products mostly lower, in thin trading due to the Rosh Hashanah holiday. NYMEX crude ended unchanged ahead of Tuesday's October contract expiration, while products eased in profit-taking from Friday's hurricane-driven levels.
File last modified: 10/8/1998
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