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Petroleum industry

Energy Sector Weakens Amid Bearish Inventory Reports

Strategic Insights

— 1 min read

Bearish inventory reports from the American Petroleum Institute (API) hit the energy sector hard, causing a significant drop in crude futures contracts on the New York Mercantile Exchange (Nymex). The April crude contract settled at $18.33/bbl, a 30-cent loss, after falling through crucial support levels. The weakness in the energy sector was not limited to crude, as heating oil and gasoline contracts also felt the effects, with heating oil falling 1.11 cents and gasoline settling down 0.95 cents.

Key Takeaways:

  • The American Petroleum Institute's weekly inventory report had a significant impact on the energy sector, with crude contracts taking the biggest hit.
  • Despite a year-to-date deficit in crude stocks, traders saw the weekly build-up and began liquidation, contributing to the decline in crude prices.
  • Heating oil contracts were also affected by inventory data, falling 1.11 cents to settle at 45.25 cents/gallon, despite a draw in distillate stocks.
  • The outlook for heating oil contracts is weak, with more room for price declines, according to Marcie Forsyth, an analyst at Refco Inc.
  • Gasoline contracts sold off on Wednesday, with reformulated gasoline (RFG) stocks building up in the East Coast region, contributing to the bearish trend.
  • Natural gas contracts tried to rally, with the April contract up 1.3 cents to settle at $1.445/MMBtu.

Statistics:

  • The April crude contract on Nymex dropped 30 cents to settle at $18.33/bbl.
  • Heating oil contracts fell 1.11 cents to settle at 45.25 cents/gallon.
  • Gasoline contracts settled down 0.95 cents at 55.83 cents/gallon.
  • The year-to-date surplus of 19.2 million barrels has continued to weaken both cash and futures prices of heating oil.
  • The April gasoline contract on Nymex settled down 0.95 cents.

Sources:

  • "Bearish inventory reports weaken energy sector," New York Times, Wednesday (date not specified).
  • Interview with a New York-based trader, Wedneday (date not specified).
  • Interview with Marcie Forsyth, analyst at Refco Inc., Wednesday (date not specified).
  • New York Mercantile Exchange (Nymex), contract prices, Wednesday (date not specified).
  • American Petroleum Institute (API), weekly inventory report, Wednesday (date not specified).

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