MARKET WATCH: Crude falls more than $3/bbl to 2-week low

Sam Fletcher
Senior Writer

HOUSTON, Nov. 14 -- The front-month crude futures contract dropped more than $3/bbl to the lowest level in nearly 2 weeks Nov. 13 on the New York market after the International Energy Agency in Paris reduced its estimates of global oil demand for the fourth quarter through 2008.

"The march to $100/bbl oil has fizzled," said analysts in the Houston office of Raymond James & Associates Inc.

Citing higher prices, weaker-than-expected economic data from both the US and the former Soviet Union, and delays in restocking European heating oil, the IEA reduced its projected fourth quarter demand for crude by 500,000 b/d. The organization also reduced its 2008 demand estimate by 300,000 b/d. IEA now estimates world demand for crude will average 85.7 million b/d in 2007, up 1.2% from 2006 levels. It's projecting demand for 87.7 million b/d in 2008, up 2.3% from 2007.

Reduction of IEA's demand estimates came just days before a special meeting of Organization of Petroleum Exporting Countries ministers scheduled Nov. 17-18 in Riyadh to discuss the market impact of a slowing economy and weak US dollar. IEA revisions "leave market participants in a greater guessing game as to whether a further increase in OPEC [production] is likely" at the group's regular meeting Dec. 5 in Abu Dhabi, said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland.

Media reports indicate the 12 OPEC members aside from Iraq and Angola produced 31.1 million b/d of crude in October, an increase of 350,000 b/d above September production. However, Raymond James analysts said, "Many still believe that the world is going to need more oil from OPEC over the next 2-3 quarters. US Secretary of Energy Samuel Bodman recently called for OPEC to increase production, citing lack of evidence of a slowdown in oil demand in the US."

Raymond James reported, "In the US, gasoline demand is still growing, but the growth rate has been slowed considerably. And with gasoline prices still playing catch-up to the recent run-up in crude, analysts worry that as gasoline prices rise, demand growth will continue to fall."

Jakob said, "With [benchmark US crude prices] stalling in the last 3 days of last week and correcting the first 2 days of this week, the technical momentum is starting to shift to the downside." He said the crude futures market "will need to show some strong rebounding action today or risk facing a confirmed momentum shift."

Energy prices
The December contract for benchmark US light, sweet crudes fell $3.45 to $91.17/bbl Nov. 13 on the New York Mercantile Exchange. The January contract dropped $3.32 to $90.20/bbl. On the US spot market, West Texas Intermediate was down $3.45 to $91.18/bbl. The December contract for reformulated blend stock for oxygenate blending (RBOB) lost 9.98¢ to $2.32/gal on NYMEX. Heating oil for the same month retreated 8¢ to $2.50/gal.

The December natural gas contract declined 1.2¢ to $7.95/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., escalated by 30.5¢ to $7.15/MMbtu. Raymond James analysts said, "Natural gas is hovering in the $8/Mcf range, as conflicting winter weather forecasts have left the market mixed."

In London, the December IPE contract for North Sea Brent crude dropped $3.15 to $88.83/bbl. The December gas oil contract fell $22 to $791.25/tonne.

The average price for OPEC's basket of 12 reference crudes lost $1.96 to $86.84/bbl on Nov. 13.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Statoil reduces capital budget by $2 billion following 4Q losses

02/06/2015 Statoil ASA has reduced its organic capital expenditure to $18 billion in 2015 from $20 billion in 2014. The move comes on the heels of a fourth qu...

MARKET WATCH: NYMEX oil price bounces back up somewhat

02/06/2015 Crude oil prices on the New York market bounced up $2/bbl to settle slightly above $50/bbl Feb. 5. The positive momentum continued during early Jan...

Oil-price collapse may aggravate producing nations’ other problems

02/05/2015 The recent global crude-oil price plunge could be aggravating underlying problems in Mexico, Colombia, and other Western Hemisphere producing natio...

MARKET WATCH: NYMEX oil drops, ending 4-day rally

02/05/2015 Crude oil prices dropped on the New York market Feb. 4 to settle below $50/bbl and to end a 4-day rally after a weekly government report showed oil...

Alberta’s premier seeks more North American energy integration

02/05/2015 Better policy integration and cooperation will be needed for Canada, Mexico, and the US to fully realize the North American energy renaissance’s po...

Deloitte studies oil supply growth for 2015-16

02/04/2015 A Deloitte MarketPoint analysis suggested large-field projects, each producing more than 25,000 b/d, could bring on 1.835 million b/d in oil supply...

Oil, gas infrastructure investments essential, House panel told

02/04/2015 Investments in oil and gas transportation and storage should move ahead because they are essential in continuing the US economic recovery and North...

MARKET WATCH: NYMEX crude oil prices reach 2015 high

02/04/2015 Crude oil prices surged more than $3/bbl on the New York market Feb. 3, closing at the highest level so far this year, but some analysts believe th...

BG’s 2015 budget ‘significantly lower than 2014’

02/03/2015 BG Group plans capital expenditures on a cash basis of $6-7 billion in 2015, a range it says is “significantly lower than 2014” due to “a lower oil...
White Papers

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...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts

On Demand

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


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

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