NYMEX crude closes lower on big jump in US inventories

New York (Platts)--22Jan2015/410 pm EST/2110 GMT

NYMEX March crude settled $1.47 lower at $46.31/b Thursday after US Energy Information Administration data showed a 10.1-million-barrel increase last week in US commercial crude stocks.

A weaker euro pushed ICE March Brent 51 cents lower at $48.52/b.

NYMEX refined products ended mixed. Prompt ULSD settled down 85 points at $1.6379/b, while March RBOB closed 53 points higher at $1.3308/gal.

A combination of strong crude production and a drop in refinery runs pushed crude inventories higher. Analysts surveyed Tuesday expected crude stocks to have increased only 2.5 million barrels.

The preliminary estimate of weekly crude production was 9.19 million b/d, down 6,000 b/d, but approximately 1 million b/d more than a year ago.

Refineries processed less crude last week, which was typical for this time of year as seasonal maintenance begins. Crude runs fell 984,000 b/d to 14.9 million b/d.

"What was most surprising was that in spite of the lower utilization rate, the gasoline inventory built once again," said Andy Lipow, president of Lipow Oil Associates.

US gasoline stocks increased 588,000 barrels to 240.9 million barrels, EIA data said.

The refinery utilization rate decreased 5.5 percentage points to 85.5% of operable capacity; analysts expected a more modest decline of less than 1 percentage point.

One factor behind the lower utilization rate could have been unplanned outages.

A pair of fires last week caused shutdowns at Husky Energy's 150,000 b/d Lima, Ohio, refinery and the Girard Point section of Philadelphia Energy Solutions' 330,000 b/d refinery complex in Philadelphia.

"Some of these refineries performing unplanned repairs might just decide to stay closed for the season and get everything done at once," said Carl Larry, oil and gas consultant at Frost and Sullivan.

ECB DECISION

Front-month ICE Brent traded as high as $50.45/b in the morning, up $1.70, before falling sharply after European Central Bank President Mario Draghi announced the bank's bond buying program.

Draghi said the bank would buy 60 billion euro per month of bonds starting in March and lasting through the end of September 2016.

The euro tumbled on the news, falling below $1.14, lowest since 2003.

NYMEX crude also erased early gains, as the March contract rose $1.94 to $49.09/b, but weakened in tandem with ICE Brent.

The immediate impact of a weaker euro and stronger dollar seemed to offset the prospect of increased oil demand, Citi Futures and OTC Clearing analyst Tim Evans said in a note.

--Geoffrey Craig, geoffrey.craig@platts.com
--Edited by Kevin Saville, kevin.saville@platts.com

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