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

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...

Omsk refinery hits target for Euro 5 diesel output

02/12/2015 JSC Gazprom Neft has switched to the exclusive production of Euro 5-standard diesel fuels at its 21.4 million-tonne/year Omsk refinery in Western S...

USW union workers add two BP refineries to strike list

02/09/2015 Union workers at two BP PLC-owned refineries in Indiana and Ohio have joined the United Steelworkers union’s (USW) unfair labor practice (ULP) stri...

Chevron details scheduled maintenance for Cape Town refinery

02/09/2015 Chevron South Africa (Pty.) Ltd., a subsidiary of Chevron Corp., has reported it will begin one of the biggest routine maintenance and safety inspe...

Union strike ongoing at US refineries as negotiations continue

02/06/2015 A strike by union workers at nine US refining and petrochemical production plants remains under way as the United Steelworkers Union (USW) continue...

Goodlatte reintroduces bills to repeal, reform RFS

02/05/2015 Calling it “a true ‘kitchen table’ issue,” US Rep. Bob Goodlatte (R-Va.) reintroduced a pair of bills to address problems in the federal Renewable ...

Regulators approve Phillips 66’s California refinery improvement project

02/04/2015 The governing board of California’s Contra Costa County has approved a permit for Phillips 66 to move forward with a proposed project that would en...

CNOOC lets contract for Huizhou refinery expansion

02/03/2015 CNOOC Oil & Petrochemicals Co. Ltd., a subsidiary of China National Offshore Oil Corp. (CNOOC), has let a contract to Porvair Filtration Group ...

Union strike under way at US refineries, petchem plants

02/02/2015 The United Steelworkers Union (USW) has instituted a strike at nine US refining and petrochemical production plants following a breakdown in negoti...
White Papers

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

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
Available Webcasts


OGJ's Midyear Forecast 2015

When 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


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


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

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


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