MARKET WATCH: Economic gains, weak dollar boost energy prices

Sam Fletcher
OGJ Senior Writer

HOUSTON, Nov. 17 -- Energy prices rebounded Nov. 16 from a two-session decline with crude up 3.3% with larger than expected US retail sales and growth in Japan’s gross national product.

“Crude also piggybacked on a weak dollar, which was at its lowest since August 2008,” said analysts in the Houston office of Raymond James & Associates Inc.

In New Orleans, analysts at Pritchard Capital Partners LLC reported, “The dollar fell following comments from the Asian-Pacific Economic Cooperation group that they will continue with stimulus programs in order to ensure economic growth and comments from Federal Reserve Chairman Ben Bernanke that ‘significant economic challenges remain.’ Both comments imply the governments across the globe will keep the stimulus spigot wide open.”

They said, “At the close of the equity market, the US Dollar Index was trading below the 75 support level. The low for the dollar index was 70.7 on Mar. 17, 2008, and this could be the next level the index tests. If the dollar continues to weaken and tests this level, then crude and commodities should remain a good market.”

However, the dollar rebounded in early trading Nov. 17 after the Federal Reserve reported a smaller-than-expected 0.1% increase in US industrial production to 0.4% in October, down from a 0.6% gain in September. As a result, analysts projected US unemployment could increase to 11% by mid-2010 from the current 10.2% rate.

The front-month natural gas contract rose 4.4% in the New York market Nov. 16, “following Henry Hub cash prices which began to reverse last week's losses with a gain of 9.8%,” said Raymond James analysts.

Pritchard Capital Partners said, “Natural gas received support from Devon Energy Corp.’s announcement that [it] would sell its international and Gulf of Mexico assets in order to focus on the development of North American assets. [Devon’s] decision implies it favorably views the long term prospects for natural gas in North America.” After the sale, Devon’s proved reserves should be 41% liquids and 59% gas, compared to 43% liquids and 57% gas today, “so the suggested divestitures will not change the composition of its proved reserves significantly but does suggest as optimistic outlook for US natural gas,” said Pritchard Capital analysts.

They added, “Energy Investor T. Boone Pickens of BP Capital showed his confidence in US natural gas plays by increasing stakes in Anadarko Petroleum Corp., Cabot Oil & Gas Corp., Chesapeake Energy Corp., Devon, and Forest Oil Corp. BP Capital also announced stakes in Hess Corp., Gastar Exploration, Ltd., and Weatherford International Ltd. Finally, if oil continues to trade higher by a weakening dollar, natural gas becomes a more attractive alternative.”

In other news, IHS Cambridge Energy Research Associates predicted global oil production capacity will grow though 2030 with no evidence of a supply peak before then, based on the company’s analysis of more than 10,000 projects around the world.

IHS CERA expects global oil productive capacity to grow to as much as 115 million b/d through that period from 92 million b/d currently, a 25% increase. “Post-2030 supply could struggle to meet demand, but this would take the form of a decades-long ‘undulating plateau’ rather than a sharp fall,” it reported.

Energy prices
The December contracts for benchmark US light, sweet crude gained $2.55 to $78.90/bbl Nov. 16 on the New York Mercantile Exchange. The January contract climbed by $2.50 to $79.53/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $2.55 to $78.90/bbl. Heating oil for December delivery increased 6.59¢ to $2.03/gal on NYMEX. Reformulated blend stock for oxygenate blending (RBOB) for the same month advanced 7.06¢ to $1.99/gal.

The December contract for natural gas continued to climb, up 22.2¢ to $4.61/MMbtu on NYMEX. On the spot market, gas at Henry Hub, La., regained 37.5¢ to $2.90/MMbtu.

In London, the new front-month January IPE contract for North Sea Brent increased $2.45 to $78.76/bbl. Gas oil for November gained $17.50 to $628.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up $1.23 to $76.49/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Cubic nears closing on Gastar East Texas acquisition

10/01/2013 Cubic Energy Inc., Dallas, said it has signed certain closing documents with respect to the previously announced acquisition of all of the East Tex...

Leor Energy invests in Navasota Energy

06/05/2007 Leor Energy LP, Houston, made a substantial equity investment in Navasota Resources Ltd. LLP, expanding Leor's position in the East Texas Deep Boss...

Burlington presses East Texas Deep Bossier gas play

11/15/2005 Drilling activity is brisk in the East Texas Deep Bossier gas play north of Bryan, Tex., and is poised to get even busier in 2006.

Area Drilling

04/01/2002

Finance/Companies news briefs, Dec. 10

12/10/2001 ICO ... Rod Services of Canada ... TRC Rod Services of the Rockies ... Tyumen Oil ... Naftna Industria Serbia ... Gastar Exploration ... Dynegy Can...

Area Drilling

08/13/2001 Gastar Exploration Ltd., Mount Pleasant, Mich., and an undisclosed partner bid successfully for 7 onshore coalbed methane exploration licenses tota...

Gastar awarded coalbed methane licenses in Victoria, Australia

07/30/2001 Gastar Exploration Ltd., Mount Pleasant, Mich., said it and a partner were winning bidders on seven coalbed methane licenses that comprise 60% of a...
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


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