MARKET WATCH: Flagging refinery capacity raises prices

Sam Fletcher
Senior Writer

HOUSTON, June 15 -- Front-month crude prices jumped above $67/bbl to a 9-month high June 14 on the New York market following a government report of reduced US government refining capacity.

The US Energy Information Administration earlier reported gasoline stocks were unchanged at 201.5 million bbl in the week ended June 8, instead of the 1.2-2 million bbl increase that many had expected. Refinery utilization dipped to 89.2% from 89.6% in the week ended June 8 vs. a consensus expectation for a 0.7% increase. Gasoline production increased slightly, nonetheless; but gasoline imports declined by 350,000 b/d (23%) in the same period.

Middle East violence, with Hamas fighters reported to have seized control of almost all of the Gaza Strip, contributed to the market's rally, analysts said.

Crude prices were down slightly because of profit taking in early trading June 15 but remained above $67/bbl. "Low refinery utilization and continuing tensions with Iran contributed to prices reaching their highest levels since September," said analysts in the Houston offices of Raymond James & Associates Inc.

Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland, said the new Nigerian government has taken a major step in releasing on bail a captured militant leader. "Reading the numbers rather than the headlines shows that all Organization of Petroleum Exporting Countries members (apart from Nigeria due to strife) have slightly increased production in May vs. April, with the losses of Nigeria offsetting those gains. OPEC will not commit now to a supply increase as it needs to see first how new developments in Nigeria impact production. If it was not for Nigeria, OPEC would have shown a supply increase in May."

Energy prices
The July contract for benchmark US light, sweet crudes traded as high as $67.89/bbl before closing at $67.65/bbl, up $1.39 for the day on the New York Mercantile Exchange. The August contract climbed $1.21 to $68.14/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1.39 to $67.66/bbl. The July contract for reformulated blend stock for oxygenate blending (RBOB) bumped up 6.94¢ to $2.22/gal. Heating oil for the same month gained 5.41¢ to $2.02/gal.

The July natural gas contract jumped 20¢ to $7.81/MMbtu after EIA reported the injection of 92 bcf of natural gas into US underground storage in the week ended June 8. That was below Wall Street consensus and compared with injections of 110 bcf the prior week and 77 bcf during the same period last year. US gas storage is now at 2.26 tcf, down 131 bcf from a year ago, but 365 bcf above the 5-year average. On the US spot market, gas at Henry Hub, La., fell 11¢ to $7.48/MMbtu.

Enerfax Daily reported, "Many analysts were startled by the [gas market] rally, as the nation is still on track to reach record levels of storage by the beginning of winter heating season on Nov. 1. Forecasts for hot weather in large, densely-populated cities aren't seen as lasting more than a few days at a time, keeping cooling demand sporadic. Weather across the Northeast and Midwest will be characterized by spurts of hot weather followed by normal temperatures."

In London, the July IPE contract for North Sea Brent crude increased by $1.02 to $70.96/bbl. The July gas oil contract gained $9 to $619/tonne.

The average price for OPEC's basket of 11 benchmark crudes continued to climb, up 18¢ to $66.74/bbl on June 14.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Lukoil taps new blending technology for Russian refinery

07/09/2015 OAO Lukoil has selected Honeywell Process Solutions (HPS), a division of Honeywell International Inc., to provide process control technology design...

Transco seeks FERC approval for New York Bay Expansion project

07/09/2015 Transcontinental Gas Pipe Line Co. LLC (Transco), a wholly owned subsidiary of Williams Partners LP, has filed an application with the US Federal E...

House Oversight panel subpoenas Kerry for Keystone XL documents

07/09/2015 The US House Oversight and Government Reform Committee issued a subpoena to US Sec. of State John F. Kerry for reports, recommendations, letters, a...

MARKET WATCH: NYMEX crude oil prices drop for fifth consecutive trading session

07/09/2015 US light, sweet crude oil prices settled slightly lower on the New York market July 8 for the fifth consecutive trading session, and analysts attri...

Ending crude export ban would help rural US areas, House panel told

07/09/2015 Rural US communities generally have benefited from the nation’s crude oil production renaissance, and potentially could be helped more if restricti...

MOL completes Ithaca Norge acquisition

07/09/2015 MOL Group, Budapest, has completed its acquisition of Ithaca Petroleum Norge from Ithaca Energy Inc. for $60 million plus possible bonuses of up to...

Courts less deferential to regulatory agencies, GMU forum told

07/08/2015 US Supreme Court decisions in the recently completed term suggest that judicial deference to federal regulatory agencies is starting to recede, spe...

AER orders Apache Canada to address integrity of pipeline system

07/08/2015 Alberta Energy Regulator has directed Apache Canada Ltd. to address the integrity of its pipeline management system because of “failure to follow p...

API releases pipeline safety recommended practice

07/08/2015 The American Petroleum Institute released a pipeline safety recommended practice that it developed with engagement from the US Pipeline and Hazardo...
White Papers

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

7 Steps to Improve Oil & Gas Asset Decommissioning

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

On Demand

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


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

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


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