MARKET WATCH: Crude ends 3-day losing streak

Sam Fletcher
OGJ Senior Writer

HOUSTON, Jan. 26 -- The price of crude rose Jan. 25, regaining a quarter of what it lost in a 3-day downturn last week, but the front-month natural gas contract dropped with forecasts of warmer weather.

“Crude oil gained 1% yesterday as the market waved goodbye to concerns about [Ben] Bernanke's confirmation [as chairman of the Federal Reserve], [President Barack] Obama's bank reforms, and Chinese demand growth,” said analysts in the Houston office of Raymond James & Associates Inc. “Gas futures fell 1.7% after new reports forecast warmer than anticipated weather in early February after a brief cold dip later this week. Energy stocks leveraged oil's correction and outran slightly positive broader markets.”

Raymond James analysts advised, “Look for today's market to react to a slew of economic reports, including home price data and consumer confidence, as well as a meeting by the Fed's Open Market Committee.” They said the Dow Jones Industrial Average and Standard & Poor’s 500 Index are down slightly before the opening of the New York market on Jan. 26 following lower trading in major Asian and European markets, while crude and natural gas were down 1% and 2%, respectively.

Olivier Jakob at Petromatrix, Zug, Switzerland, said, “There was little new news for crude oil yesterday and if West Texas Intermediate managed technically to move back above $75/bbl there was not enough substance behind the move to prevent overnight pressure on the news that China is imposing higher reserve ratio on certain banks in its continued efforts to curb overheating. The US existing home sales numbers were as well on the negative side and today we will need to watch for the US consumer confidence number in front of the Fed meeting’s result tomorrow.”

Jakob reported, “Oil stock levels and excess capacity both upstream and downstream are still much above the levels of previous years, yet oil is being priced at the equivalent of the boom years when no available spare capacity was available to the system. The fundamental link to current prices is weak, hence oil prices need at least some general optimism that boom times are around the corner to sustain prices above $80/bbl in a contango market. That general optimism depends a lot on China’s consumption saving the rest of the world, and that will be somewhat challenged by the Chinese government trying to regulate the formation of bubbles.”

The gasoline crack is still well supported, with US production of products somewhat capped by refinery maintenance, operational glitches, “and some risk premium for additional demand from Brazil (due to the very tight sugar and ethanol supply and demand) and Venezuela (due to the power supply risk on the refining system),” Jakob said.

Meanwhile, analysts at the Centre for Global Energy Studies, London, reported global oil demand “has finally turned the corner,” with oil use in the fourth quarter of 2009 up from the same quarter in 2008 after five consecutive quarters of year-on-year declines. “December’s surge in oil use was enough to ensure that global oil demand in the fourth quarter 2009 was above that of fourth quarter 2008, the first year-on-year increase in quarterly oil demand since the second quarter of 2008. It also led to the first quarterly stock draw since the winter of 2007-08, but the impact may prove to be short-lived,” said CGES analysts. “Despite rising demand, market fundamentals are not expected to support upward pressure on oil prices in 2010.”

One factor contributing to lower oil prices last week was news the UK’s inflation rate jumped to 2.9% in December. “Few envisaged a rise of this magnitude and the figure certainly makes an interest rate rise before the middle of the year more likely, evidenced by the fact that the pound strengthened considerably against the euro after the news was announced,” said CGES analysts. “More crucially for the oil market, other countries might follow suit. If the US Federal Reserve were to raise interest rates then not only would the ensuing stronger dollar help weaken the oil price…but the incipient recovery in the US economy to date could be undermined.”

Energy prices
The March contract for benchmark US sweet, light crudes increased 72¢ to $75.26/bbl Jan. 25 on the New York Mercantile Exchange. The April contract gained 77¢ to $75.69/bbl. On the US spot market, WTI at Cushing, Okla., was up 72¢ to $75.26/bbl. Heating oil for February delivery increased 2.42¢ to $1.97/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month rose 3.51¢ to $2/gal.

The February natural gas contract dropped 9.7¢ to $5.72/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., increased 8.5¢ to $5.76/MMbtu.

In London, the March IPE contract for North Sea Brent crude was up 86¢ to $73.69/bbl. Gas oil for February dropped $3.25 to $594.25/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes fell $1.05 to $71.97/bbl.

Contact Sam Fletcher at

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
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.


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.


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.


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.


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