MARKET WATCH: Oil prices continue to climb on New York market

Sam Fletcher
Senior Writer

HOUSTON, July 17 -- Having blasted through market resistance at $73/bbl in the previous session, the August contract for benchmark US crude continued climbing to a new 11-month high above $74/bbl July 16 on the New York market.

The near-month gasoline futures contract fell more than 4%, however, on expectations of a government report this week of an increase in US gasoline stocks.

Meanwhile, speculation by investment funds continues to support higher oil prices in the New York market "no matter the news, data, or interproduct relative-value spreads," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. "Products and especially gasoline are in a corrective phase, which translates into lower refinery margins," he said.

"The theme of resilient demand is for now not verified by the latest statistics, and the pattern on reformulated blend stock for oxygenate blending (RBOB) has shifted from 'correction' to 'liquidation,'" Jakob said, adding, "The August RBOB crack [the difference between the purchase price of crude oil futures and the sale price of gasoline and heating oil futures] has lost $10/bbl in 5 days and is also $10/bbl lower than last year. Heating oil, which for now had managed to follow more closely the strength in West Texas Intermediate, is also starting to show a rapidly correcting crack. We find that for WTI to be trading higher in such a negative price pattern on products and while [North Sea] Brent is also correcting down represents an increasing risk. The WTI positions are defended heavily but will be harder to be sustained if the strong correction on products continues."

Analysts in the Houston office of Raymond James & Associates Inc. reported crude futures prices were up July 17 in electronic trading before the start of the regular daily session on the New York Mercantile Exchange on "news" that the Organization of Petroleum Exporting Countries plans to maintain current production levels despite its recently increased demand forecast, up by 100,000 b/d to 31.1 million b/d in the fourth quarter. For months now, OPEC officials have said it would do no good to increase the amount of oil pumped to market when there is insufficient refining capacity to process it.

However, Raymond James analysts said, "Increased refinery operations, partly offset by speculation that the US Energy Department will report [on July 18] a build in US gasoline supplies, is also driving crude higher."

A hydrocracking unit at Valero Energy Corp.'s McKee refinery was reported to have restarted July 14 after being taken down for equipment failure. The 171,000 b/d refinery in Sunray, Tex., has been operating at 150,000 b/d since June. It shut down Feb. 16 when a fire in a deasphalter unit threatened four adjacent spherical propane tanks (OGJ Online, Feb. 21, 2007). On May 24, a fluid catalytic cracking unit was shut down for maintenance due to a problem with circulation of catalyst.

ExxonMobil Corp. also restarted a hydrocracking unit at its 565,000 b/d Baytown, Tex., refinery over the weekend. That was shut down June 23 to repair a leak.

The recovered refining capacity at the two facilities came too late, however, to affect DOE's upcoming report on US inventories and refining capacity through July 13.

In other news, Japanese refiners are reported to be considering a request from the state-run National Iranian Oil Co. to be paid in yen currency for future purchases of Iranian crude in an apparent attempt to reduce Iran's holdings of US dollars. International oil sales are priced in US dollars, which frequently have traded at a discount against the stronger Japanese yen and European euro in recent years. Japanese refiners are said to be reluctant to make the change as it offers no advantage to them. Meanwhile, Iran is still defying US and United Nations' sanctions over its nuclear power program.

Energy prices
The August contract for benchmark US light, sweet crudes gained 22¢ to $74.15/bbl July 16 on NYMEX. The September contract advanced by 10¢ to $74.23/bbl, but subsequent monthly contracts through June 2008 posted losses. On the US spot market, WTI at Cushing, Okla., was up 22¢ to $74.16/bbl. The August RBOB contract fell 9.86¢ to $2.13/gal on NYMEX, the lowest closing for a front-month RBOB contract since mid-June. Heating oil for the same month declined 5.5¢ to $2.06/gal.

The August natural gas contract dropped 28.6¢ to $6.38/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was down 10.5¢ to $6.26/MMbtu. Raymond James analysts said natural gas prices were flat in premarket trading July 17 "on forecasts for below-normal temperatures and lower demand in the key consuming markets of the Midwest and Northeast." They said, "Increasing storage and a lack of sustained heat to boost cooling demand continue to put downward pressure on natural gas prices."

In London, the August IPE contract for North Sea Brent crude, declined 24¢ to $77.33/bbl. Gas oil for August gained $2.50 to $657.50/tonne.

The average price for OPEC's basket of 11 benchmark crudes increased 34¢ to $72.83/bbl on July 16.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

ExxonMobil forecasts 35% higher world energy demand by 2040

12/10/2014 A significantly bigger global middle class, expanded emerging economies, and 2 billion more people will contribute to 35% higher world energy deman...

Firms' third-quarter earnings climbed amid lower crude oil prices

12/08/2014 A sample of 58 oil and gas producers and refiners based in the US recorded a combined 38% jump in profits for this year's third quarter compared wi...

Chapman to succeed Pryor as ExxonMobil Chemical president

11/24/2014 Neil A. Chapman is expected to assume the roles of president of ExxonMobil Chemical Co. and vice-president of ExxonMobil Corp. following the retire...

Induced seismicity research effort identifies information gaps

11/10/2014 A federally coordinated effort to determine whether oil and gas activities are related to growing reports of induced seismic activity has identifie...

ExxonMobil, Linn to make second asset exchange this year

10/06/2014 ExxonMobil Corp. has agreed to trade interest in 500 net acres from South Belridge field near Bakersfield, Calif., to Linn Energy LLC, Houston, in ...

ExxonMobil 'winds down' Arctic well, obeys sanctions

09/29/2014 ExxonMobil Corp. released a statement that it is complying with all US sanctions on Russia after news reports that the operator had halted operatio...

AAPG ICE: ExxonMobil outlines international approach to unconventional development

09/22/2014 Global energy demand is expected to increase 35% to 2040, translating to 120 billion boe/year, or nearly 350 million boe/d, stated Rocky Becker, vi...

ExxonMobil ‘winding down’ Arctic well, complying with US, EU sanctions on Russia

09/19/2014 ExxonMobil Corp. released a statement that the company is complying with all US sanctions on Russia after news reports that the operator had halted...

ExxonMobil, Linn to make second asset exchange this year

09/19/2014 ExxonMobil Corp. has agreed to trade interest in 500 net acres from South Belridge field near Bakersfield, Calif., to Linn Energy LLC, Houston, in ...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


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