MARKET WATCH: Energy prices slip lower; unemployment at 26-year high

Sam Fletcher
OGJ Senior Writer

HOUSTON, Sept. 4 -- Energy prices continued slipping lower Sept. 3, with crude down further in early trading Sept. 4 in the New York market as the Department of Labor reported unemployment in the US reached a 26-year high in August.

Natural gas dropped to the lowest closing price for a front-month contract since March 2002 after the Energy Information Administration reported the injection of 65 bcf of gas into US underground storage in the week ended Aug. 28. That raised the working gas in storage to more than 3.32 tcf, which is 489 bcf more than in the same period last year and 501 bcf above the 5-year average (OGJ Online, Sept. 3, 2009).

The US unemployment rate rose to 9.7% last month with the loss of 216,000 jobs—fewer than expected—following elimination of 276,000 jobs in July. However, officials said the “underemployment rate” among part-time workers seeking full-time jobs and those who have given up looking for work—hit a record 16.8%, indicating a major economic recovery will likely be delayed until 2010.

Officials earlier reported US initial claims for unemployment benefits were down 4,000 to 570,000 in the latest week, compared with expectations of 564,000 new claims.

Oil continued to range trade around $70/bbl Sept. 3 and closed “relatively flat,” said analysts in the Houston office of Raymond James & Associates Inc.

Crude prices have “been in a total standstill for the last 2 days, and it would take a strongly worse-than-expected nonfarm payrolls [report] to provoke a renewed downward trend in front of a long weekend,” said Olivier Jakob at Petromatrix, Zug, Switzerland. “The trading gear-shift is likely to be put on neutral today while we check the weather conditions for the holiday weekend.” The US Labor Day holiday on Sept. 7 marks the end of the summer driving season.

Adam Sieminski, chief energy economist, Deutsche Bank, Washington, DC., said, “We believe the rally in oil prices has lost steam as equity markets have corrected lower, the US dollar has stopped weakening, and investors become increasingly concerned towards a possible tightening in the treatment on position limits as currently supervised by New York Mercantile Exchange. We expect this trend will continue to cap oil price advances.”

Raymond James analysts reported, “Natural gas continued its downward march towards $2/Mcf, dropping 7.6%…. Gas in storage still remains on pace to break all-time highs, and we continue to believe that gas prices only have room to fall in the near-future,” they said.

In New Orleans, analysts at Pritchard Capital Partners LLC said, “Natural gas has fallen 27% in the past 15 trading days. Too much supply and a lack of industrial demand are the primary reasons for the decline. The current acceleration in downtrend could be due to two trade unwinds: (1) the unwind and shrinking of the US Natural Gas Fund ETF [exchange traded fund], buying UNG shares and selling natural gas contracts, and (2) the unwind of the convergence trade—traders that were short oil and long natural gas are closing out an unsuccessful trade.”

They advised, “If you look at a long-term natural gas chart over the past 5 years, natural gas has made a year low in September and then rallied into the winter. This is true for every year except 2005, and that exception was due to Katrina. There are many reasons not to like natural gas, but turning bearish on natural gas in September with little idea of what type of winter lies ahead and after an 80% decline from the peak and a 27% decline in the last 15 trading days seems a little late.”

Sieminski said, “We are closely watching the winter temperature implications of the El Nino signals, which have continued to rise. El Ninos are often associated with warmer temperatures in the Northeast US. After a mild-demand summer, continuing robust production, and no hurricanes in the Gulf [of Mexico] so far this year, natural gas prices seemed destined to remain under pressure.”

Meanwhile, Raymond James analysts said, “Energy stocks outperformed the broader market yesterday, led by the oil field service names (with the Oil Service Index up 1.8%) while exploration and production companies traded flat.”

Energy prices
The October contract for benchmark US light, sweet crudes traded at $67.66-69.40/bbl Sept. 3 before closing at $67.96/bbl, down just 9¢ for the day on NYMEX. The November contract declined 13¢ to $68.55/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 9¢ to $67.96/bbl. Heating oil for October delivery lost 1.55¢ to $1.74/gal on NYMEX. Reformulated blend stock for oxygenate blending (RBOB) for the same month dropped 1.58¢ to $1.79/gal.

The October natural gas contract fell 20.7¢ to $2.51/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 22.5¢ to $2.05/MMbtu.

In London, the October IPE contract for North Sea Brent crude declined 54¢ to $67.12/bbl. Gas oil for September dropped $7 to $548.75/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes increased 1¢ to $66.65/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Inhofe, Lankford say new BIA rules threaten Osage oil operations

07/10/2015 New US Bureau of Indian Affairs regulations that increase production expenses on tribal lands could put the Osage Nation out of business, Oklahoma’...

House panel’s crude export ban hearing weighs urgency against caution

07/10/2015 A US House Energy and Commerce subcommittee hearing on legislation to repeal the ban on exporting US-produced crude oil quickly broke along party l...

Chevron Phillips Chemical makes executive appointments

07/10/2015

Chevron Phillips Chemical Co. LLC has made several executive appointments, all effective Aug. 1.

Twelve workers killed in Nigeria pipeline explosion

07/10/2015 Eni SPA reported that an explosion occurred July 9 at the repair site for the Tebidaba-Clough Creek oil pipeline in Nigeria’s onshore Niger Delta.

Gov. Tomblin forms West Virginia oil, gas safety commission

07/10/2015 West Virginia Gov. Earl Ray Tomblin (D) established the oil and gas safety commission he announced in his 2015 State of the State address. The grou...

MARKET WATCH: NYMEX, Brent crude oil prices rebound more than $1/bbl

07/10/2015 Prices for US light, sweet crude oil and Brent crude each rebounded by more than $1/bbl on their respective markets July 9, and analysts attributed...

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...
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