MARKET WATCH: Stock market plunge chills energy prices

Sam Fletcher
Senior Writer

HOUSTON, July 27 --Energy prices fell July 26, pulled down by a stock market plunge that brought the Dow Jones Industrial Average down 311.5 points for its second worst day of the year, as fears of shaky credit markets and the troubled housing sector swept Wall Street.

The September contract for the best US crude topped $77/bbl in intraday trade, however, before closing below $75/bbl. It "reluctantly gave up the early session gains when it was apparent that the stock market slide would be too large to ignore," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland, in a July 27 report.

"The movements on equities will obviously be a key driver today, but the 'buying on the dips' pattern has not disappeared yet," Jakob said. He also noted, "The dollar index is maintaining its recent rebound and is a key indicator to follow for oil as long as we stay near record highs."

Analysts in the Houston office of Raymond James & Associates Inc. reported crude prices rose during premarket trading July 27 on a forecast for a growing US economy. They cited a Bloomberg News survey of 85 economists that indicated the US gross domestic product increased at an annual rate of 3.2% during the second quarter of 2007. "This would represent the fastest pace of growth in over a year," they said.

"Helping keep oil prices in check is the news that US gasoline stockpiles are capable of meeting demand in the home stretch of driving season," said Raymond James analysts. They also noted that the price premium for North Sea Brent crude vs. West Texas Intermediate has virtually disappeared, with the two crudes now trading within a few cents of each other "for the first time since February."

Eitan Bernstein of Friedman, Billings, Ramsey & Co. Inc., Arlington, Va., said, "With summer (peak demand) now more than half done, there is a growing sense that supplies are adequate, and wholesale gasoline prices, refining margins, and refiner stocks have sharply pulled back."

Bernstein said, "US total gasoline inventories are currently 6.9 million bbl (3%) below comparable year-ago levels. However, moving from summer to fall, gasoline demand typically declines, and supply concerns abate. Last year, this seasonal softening resulted in US average refining margins falling from $22/bbl to $7/bbl from late July through September and in a 30% average decline in refiner stocks. Despite the relatively tighter supply-demand situation, this year's seasonal sell-off has arrived about 2 weeks earlier."

Energy prices
The September contract for benchmark US light, sweet crudes traded as high as $77.24/bbl July 26 before closing at $74.95/bbl, down 93¢ for the day on the New York Mercantile Exchange. The October contract dropped 99¢ to $74.47/bbl. On the US spot market, WTI at Cushing, Okla., was down $1.03 to $74.96/bbl. Heating oil for August delivery fell 3.31¢ to $2.03/gal on NYMEX. The August contract for reformulated blendstock for oxygenate blending (RBOB) declined by 1.2¢ to $2.08/gal.

The August natural gas contract gained 1.8¢ to $5.94/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated by 23.5¢ to $5.83/MMbtu. The natural gas commodity price advanced as traders ignored huge US storage inventories reported July 26 by the Energy Information Administration and focused instead on the approach of the most intense 2 months of the hurricane season, said analysts at Enerfax Daily. The National Hurricane Center in Miami says August and September typically produce the largest number of tropical storms in the Atlantic. Hurricane Katrina formed in late August 2005, followed by Hurricane Rita in mid-September. The 2007 storm season that began in June is expected to produce 13-17 named storms, including as many as 5 major hurricanes in Categories 3-5.

In London, the September IPE contract for North Sea Brent crude fell by $1.14 to $75.18/bbl. Gas oil for August jumped by $19.25 to $656.25/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 11 reference crudes increased by $1.31 to $72.88/bbl on July 26.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

MARKET WATCH: Oil prices continue falling awaiting economic statistics

12/16/2014 Oil prices on the New York market dropped in Dec. 15 trading following reports of supply disruptions in Libya and awaiting reports of economic stat...

MARKET WATCH: OPEC basket price closes below $59/bbl

12/15/2014 The average crude oil basket price for the 12 members of the Organization of Petroleum Exporting Counties closed below $59/bbl on Dec. 12 while cru...

TAEP: TPI still peaking, but ‘contraction unavoidable’ as oil prices fall

12/12/2014 The Texas Petro Index (TPI), a composite index based on a comprehensive group of upstream economic indicators released by the Texas Alliance of Ene...

MARKET WATCH: NYMEX crude oil price extends slump

12/12/2014 Crude oil prices extended their slump on the New York market with a Dec. 11 settlement of less than $60/bbl for January, and prices continued downw...

US needs more data before ending crude export ban, House panel told

12/11/2014 Much more environmental impact information is needed before the US can reasonably remove crude oil export limits, a witness told a House Energy and...

Rosneft, Essar sign terms of oil supply agreement

12/11/2014 OAO Rosneft and Essar Energy PLC have signed key terms of an oil supply agreement in New Delhi. Rosneft said shipments to India may begin in 2015.

Barton introduces bill to remove US crude export limits

12/11/2014

US Rep. Joe Barton (R-Tex.) introduced legislation that would remove US crude oil export limits that have been in place for nearly 40 years.

MARKET WATCH: NYMEX crude oil price slides below $61/bbl

12/11/2014 Crude oil prices fell below $61/bbl for January delivery on the New York market Dec. 10 after the Organization of Petroleum Exporting Countries low...

MARKET WATCH: US crude oil prices rebound modestly awaiting inventory report

12/10/2014 Crude oil prices rose modestly on the New York market Dec. 9 while analysts awaited the US government weekly inventory report on crude oil and prod...

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