MARKET WATCH: Energy prices drop on mixed signs of US economy

Sam Fletcher
Senior Writer

HOUSTON, Dec. 10 -- Energy prices fell Dec. 7 among mixed reports on US employment that could leave the door open for another interest rate reduction when the Federal Open Market Committee, the policy-making arm of the Federal Reserve Bank, meets Dec. 11.

The US Department of Labor reported 94,000 nonfarm payroll jobs in November. A separate survey of households showed the strongest job growth in nearly 6 years, with 696,000 more people reporting they were employed in November. That kept the US unemployment rate steady at 4.7%.

"Crude is now 11% lower than its highs from late November and could drop further in the coming weeks. Investors continue to think that the Federal Reserve will cut rates and traders will be closely monitoring the decision. Natural gas is trading over 2% lower this morning as the 8-14-day forecast shows warmer than normal weather on the horizon," said analysts in the Houston office of Raymond James & Associates Inc.

Robert S. Morris, Banc of America Securities LLC, New York, reported, "After a volatile week, West Texas Intermediate spot oil prices ended up posting a 43¢/bbl decline even though the Organization of Petroleum Exporting Countries decided to not increase output and a sharp drop in US crude oil inventories was reported. Oil prices had posted a nearly 10% drop the prior week due largely to speculation that OPEC would announce an increase in production at last week's meeting. However, the cartel stated that the market was 'well supplied' and that there was never any discussion about boosting output. OPEC plans to meet again Feb. 1 in order to keep an eye on 'market uncertainties.'"

In Paris, analysts with Societe Generale Group said, "The markets have been weighed down by oil demand concerns in the last 2 weeks and recent data from the US continue to indicate weakness there." They noted, "Many oil market participants focus only on the weekly US data and ignore the monthly data because of the 2-month time lag for the latter. However, US final monthly data is more accurate than the preliminary weekly data; importantly, this year, a strong pattern of downward revisions in the monthly figures shows a very different and much weaker oil demand picture for the country that still accounts for almost a quarter of global consumption. High prices do appear to be having a negative impact on US demand, which has not grown year-on-year since May."

Energy prices
The January contract for benchmark US light, sweet crudes traded as low as $87.07/bbl in the Dec. 7 session on the New York Mercantile Exchange before closing at $88.28/bbl, down $1.95 for the day. The February contract dropped $1.79 to $88.15/bbl. On the US spot market, WTI at Cushing, Okla., was down $1.95 to $88.29/bbl. Heating oil for January delivery fell 4.03¢ to $2.50/gal on NYMEX. The January contract for reformulated blend stock for oxygenate blending (RBOB) declined 3.23¢ to $2.27/gal.

The January natural gas contract dropped 17.5¢ to $7.16/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., fell 22¢ to $7.08/MMbtu.

In London, the January IPE contract for North Sea Brent crude lost $1.54 to $88.64/bbl, again topping the NYMEX price for WTI. The December gas oil contract dropped $3.25 to $784.25/tonne.

The average price for OPEC's basket of 12 reference crudes gained 78¢ to $85.26/bbl on Dec. 7. So far this year, OPEC's basket price has averaged $67.94/bbl, up from $61.08/bbl for all of 2006.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Pessimism mounts over UK offshore industry

02/02/2015

Pessimism about the UK offshore oil and gas industry is gaining momentum.

Syncrude sees additional $260-400 million in possible budget cuts

02/02/2015 The estimate for capital expenditures has also been reduced to $451 million net to COS, which includes $104 million of remaining expenditures on ma...

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...

MARKET WATCH: NYMEX, Brent crude oil prices rebound

02/02/2015 Crude oil prices rallied on the New York and London markets on Jan. 30. Brent crude oil prices settled at just under $53/bbl, which was its highest...

Shell cuts $15 billion in spending for 2015-17

01/30/2015 Royal Dutch Shell PLC has curtailed more than $15 billion in potential spending over the next 3 years, but is not “not overreacting to current low ...

Chevron’s $35 billion capital budget down 13% from last year

01/30/2015 Chevron Corp. will allocate $35 billion in its capital and exploratory investment program for 2015, including $4 billion of planned expenditures by...

Oxy cuts capital budget by a third

01/30/2015 In the midst of falling oil prices, Occidental Petroleum Corp., Houston, expects to reduce its total capital spending for 2015 to $5.8 billion from...

MARKET WATCH: NYMEX natural gas prices drop after storage report

01/30/2015 US natural gas closed at its lowest price in more than 2 years on the New York market Jan. 29 following the government’s weekly gas storage report,...

PwC: Low oil prices might drive surge in restructuring in 2015

01/29/2015 Mergers and acquisitions (M&A) in the oil and gas industry hit 10-year highs in terms of deal value and volume in 2014, according to a report f...
White Papers

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

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


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

When 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



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


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


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