MARKET WATCH
Low distillate draw undermines energy prices

Sam Fletcher
Senior Writer

HOUSTON, Feb. 15 -- Energy futures prices continued to seesaw, falling again Feb. 14 when the US Energy Information Administration reported a lower-than-expected drawdown of distillate stocks despite recent cold weather in much of the US.

Distillate inventories fell 3 million bbl to 133.3 million bbl during the week ended Feb. 9, vs. a Wall Street consensus of a 4 million bbl draw. However, US crude inventories dropped 600,000 bbl to 323.9 million bbl, against consensus expectation for a 1 million bbl build. Gasoline stocks were down by 2.1 million bbl against expectations for a 2.1 million bbl build.

The data—especially the unexpected drop in gasoline inventories—were "positive for refiners," said Jacques Rousseau, senior energy analyst at Friedman, Billings, Ramsey Group Inc., Arlington, Va. "Total refined product inventories showed their largest week-over-week decline in over 3 months, as production and import gains were insufficient to meet increased consumption. We expect this trend of declining inventories to continue over the next several weeks, as refinery maintenance season continues, putting upward pressure on refining margins and refiner stock prices," he said.

Meanwhile, the front-month contract for benchmark US crude has traded at $57-60/bbl for 10 consecutive sessions on the New York market "and continues to almost trade the whole range in a 1-day frame, each day being a reversal of the previous day," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. "Heating oil is dragging down the energy complex with the combination of the winter phase-out and weather patterns that are calling for temperatures to be normal to above-normal in the last week of the month. On the other hand, gasoline is resisting the correction and making for a stronger crack and support of the 3-2-1 refinery crack," he said.

"The dollar weakness should also provide some support. Gold is at multimonth high and the equities continue to make new record highs," Jakob said.

Energy prices
The March contract for benchmark US light, sweet crudes lost $1.06 to $58/bbl Feb. 14, giving back most of its gain from the previous trading session on the New York Mercantile Exchange. The April contract lost $1.28 to $58.57/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.06 to $58/bbl. Heating oil for March delivery dropped 5.49¢ to $1.64/gal on NYMEX. The March contract for reformulated blend stock for oxygenate blending (RBOB) continued to climb, however, up 0.71¢ to $1.62/gal.

The March natural gas contract declined by 12.6¢ to $7.24/MMbtu on NYMEX. On the US spot market, however, increased demand generated by recent cold weather pushed up the price of gas at Henry Hub, La., by 79¢ to $8.86/MMbtu. EIA reported Feb. 15 the withdrawal of 259 bcf of gas from US underground storage in the week ended Feb. 9. That was above the Wall Street consensus and compared with withdrawals of 224 bcf the prior week and 102 bcf during the same period last year. US gas storage now stands at nearly 2.1 tcf, down 193 bcf below year-ago levels but up 268 bcf above the 5-year average.

In London, the April IPE contract for North Sea Brent crude lost $1.35 to $57.43/bbl. Gas oil for March dropped $11.25 to $505.50/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes climbed by 44¢ to $53.70/bbl on Feb. 14.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Work stoppages commence at largest US refinery, three other facilities

02/23/2015 The United Steelworkers union (USW) has launched additional work stoppages at the largest refinery in the US and three other facilities as part of ...

API: US oil product demand reached highest January level since 2008

02/23/2015 US oil product demand rose 1.5% year-to-year to an average 19.2 million b/d in January, its highest level for the month since 2008, the American Pe...

Expansion work progresses at Lukoil’s Volgograd refinery

02/20/2015 Contruction activities related to the expansion of OAO Lukoil’s 11 million-tonne/year Volgograd refinery in southern Russia are proceeding as plann...

Tesoro advances projects at Anacortes refinery

02/20/2015 Tesoro Corp. plans to move forward with two complementary projects to enhance production of cleaner products at its 120,000-b/d Anacortes, Wash., r...

India’s IOC to invest in processing-related upgrades, expansions

02/19/2015 Indian Oil Corp. Ltd. (IOC) has approved a series of expansions and upgrades designed to improve fuel quality and production at several of its refi...

ExxonMobil investigating explosion at Torrance refinery

02/19/2015 An investigation is under way into the cause of an explosion and ensuing fire that took place at ExxonMobil Corp.’s 149,500-b/d Torrance, Calif., r...

Pemex lets contract for Salamanca refinery amid budget cuts

02/18/2015 Mexico’s Petroleos Mexicanos (Pemex), through a contractor, has let a contract to SENER Ingeniería y Sistemas SA, Mexico City, a division of SENER ...

Uganda taps Russian firm to build country’s first refinery

02/17/2015 The government of Uganda has selected a consortium led by Russia’s RT Global Resources, Moscow, as its first choice to construct the country’s firs...

Mangalore refinery reports steady operations following expansion

02/13/2015 Operations are proceeding smoothly at Mangalore Refinery & Petrochemicals Ltd.’s (MRPL) refinery in Mangalore, India, following the recent comp...
White Papers

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

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

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