Market watch: Gas futures prices decline in profit taking

Sam Fletcher
OGJ Senior Writer
HOUSTON, Dec. 20 -- Energy futures markets were mixed Thursday, with a drop in natural gas prices as a result of profit taking on the New York Mercantile Exchange.

Meanwhile, Petroleos de Venezuela SA Pres. Alí Rodríguez Araque said it will take "a tremendous effort during several years" for Venezuela's economy to recover from the general strike, now well into its third week, that has crippled PDVSA's daily oil production and virtually eliminated current exports of crude and petroleum products.

"A long time will pass before the company recovers, not only from the economic damage, but also from the damage inflicted on Venezuela's oil industry in the international market," Rodríguez said. He reiterated his call for striking PDVSA employees to return to work.

A large majority of PDVSA's employees are participating in the strike that began Dec. 2 to topple Venezuelan President Hugo Chavez. Rodriguez has tried to use retired oil workers, military personnel, and even foreign workers to break the strike. But soldiers failed to restart oil operations because they cannot operate the sophisticated equipment.

As a result, PDVSA's oil production has been slashed to 370,000 b/d, less than 15% of its normal level of some 3 million b/d. PDVSA officials said production is unlikely to fall further because they do not want to cut off basic electric power services in that country.

Meanwhile, Venezuela's oil inventory capacity is nearly full, since virtually all refining and export operations are at a standstill. More than 40 tankers are moored near inactive Venezuelan ports. Oil accounts for nearly a third of Venezuela's gross domestic product, half of the government's income, and 80% of the country's exports, primarily to US markets.

TotalFinaElf SA said it halted almost all of its oil production in Venezuela, except for 2,000 b/d from Jusepin field. That output is continuing just to maintain the mature field's production capability, officials said. Jusepin normally produces 38,000 b/d. But most of that had to be shut in because the gas needed for injection to compensate for the field's natural decline is no longer being delivered, officials said.

The halt of TotalfinaElf's production in both Jusepin and Zuata fields is being used to anticipate work that was scheduled for a later period, said Jean-marie Guillermon, TotalFinaElf's general manager in Caracas.

The January contract for benchmark US light, sweet crudes gained 12¢ to $30.56/bbl Thursday on NYMEX, but the February position lost 24¢ to $30.19/bbl. Heating oil for January delivery increased 0.53¢ to 86.06¢/gal. Unleaded gasoline for the same month was up 0.27¢ to 87.81¢/gal.

The January natural gas contract dropped 23.1¢ to $5.05/Mcf, in what analysts at Enerfax Daily described as "an overbought market falling in a wave of profit-taking."

They said, "The heavy winter premium pumped into the market by speculators, an illiquid market, finally started to show signs of faltering. The market ran out of buyers, so it took profits. It failed to generate new highs, even with a supportive storage withdrawal."

The US Energy Information Administration reported Thursday that 159 bcf of gas was withdrawn from US underground storage during the week ended Dec. 13. That was down from 162 bcf the previous week but up from 42 bcf during the same period last year and well above the consensus of Wall Street analysts.

US gas storage now stands at 2.6 tcf, down 560 bcf from year-ago levels and 151 bcf below the 5-year average. Meanwhile, meteorologists at Salomon Smith Barney Inc. are predicting colder-than-normal weather in most of the central and eastern US in late December and early January.

Salomon Smith Barney analyst Robert Morris said Thursday that the latest bi-annual report by Canada's National Energy Board (NEB) noted that initial productivity from the Western Canada sedimentary basin (WCSB) declined to less than 400 Mcfd per well in 2001 from 600 Mcfd per well in 1996. Average decline rates in first-year production in that area increased to 50% last year from 35% in 1996.

"The NEB estimates that the overall decline rate for current production in the WCSB is 20%/year, although we believe that it could be closer to 25%," said Morris. At either rate, he said, total Canadian exports of natural gas to US markets are likely to drop during the next 2 years. "We estimate that total Canadian imports will decline roughly 3% this year and an additional 4% in 2003," he said.

Morris noted, "The NEB report did not include production from the prolific Ladyfern field, which has already declined 40% from its peak production rate of 650 MMcfd in June. We believe Ladyfern production could exit next year as low as 100-150 MMcfd, or down more than 50% on average in 2003 relative to this year."

In London, the February contract for North Sea Brent crude lost 27¢ to $28.22/bbl on the international petroleum exchange on the International Petroleum Exchange. The January natural gas contract lost 3.4¢ to the equivalent of $3.87/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes increased by 44¢ to $29.56/bbl Thursday.
Contact Sam Fletcher at samf@ogjonline.com

Related Articles

EIA: US oil output fell 50,000 b/d in May

07/07/2015 Total US crude oil production dropped 50,000 b/d in May compared with April and is expected to continue falling through early 2016 before growth re...

BLM approves ROW for Elko gas pipeline expansion project

07/07/2015 The US Bureau of Land Management’s Tuscarora, Nev., field office signed a decision record approving a right-of-way for Paiute Pipeline Co.’s (PPC) ...

Croatian refinery lets contract for upgrading project

07/07/2015 Croatia’s INA Industrija Nafte DD (INA) has let a contract to Findland’s Neste Jacobs Oy to provide project management consultancy (PMC) for a resi...

Obama urged by IPAA president to lift ban on US crude exports

07/07/2015 Commending the administration for its actions allowing some condensate to be exported as a petroleum product, Independent Petroleum Association of ...

Cidade de Itaguai FPSO anchors in Lula field

07/07/2015 Petroleo Brasileiro SA (Petrobras) reported that the Cidade de Itaguai floating production, storage, and offloading vessel has arrived at the Irace...

AER shuts in 16 Murphy Oil sites in Peace River region for noncompliance

07/07/2015 Alberta Energy Regulator said it has shut in or partially shut in 16 sites operated by Murphy Oil Co. Ltd. in the Peace River region. The sites wer...

MARKET WATCH: NYMEX, Brent oil prices take dive on world oil oversupply concerns

07/07/2015 US light, sweet crude oil prices plummeted more than $4/bbl on the New York market July 6, marking a 5-month low, while Brent crude oil prices on t...

WAFWA: Aerial survey finds lesser prairie chicken population grew

07/06/2015 A recent range-wide aerial survey found the lesser prairie chicken population rose 25% from 2014 to 2015, the Western Association of Fish & Wil...

Production ramps up from Sunrise oil sands project

07/06/2015 Husky Energy Inc., Calgary, reported that 25 well pairs are now on production at its Sunrise oil sands project in northeastern Alberta. Steaming is...
White Papers

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected