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

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...

Ending crude export ban would help rural US areas, House panel told

07/09/2015 Rural US communities generally have benefited from the nation’s crude oil production renaissance, and potentially could be helped more if restricti...

MOL completes Ithaca Norge acquisition

07/09/2015 MOL Group, Budapest, has completed its acquisition of Ithaca Petroleum Norge from Ithaca Energy Inc. for $60 million plus possible bonuses of up to...

Courts less deferential to regulatory agencies, GMU forum told

07/08/2015 US Supreme Court decisions in the recently completed term suggest that judicial deference to federal regulatory agencies is starting to recede, spe...

AER orders Apache Canada to address integrity of pipeline system

07/08/2015 Alberta Energy Regulator has directed Apache Canada Ltd. to address the integrity of its pipeline management system because of “failure to follow p...

API releases pipeline safety recommended practice

07/08/2015 The American Petroleum Institute released a pipeline safety recommended practice that it developed with engagement from the US Pipeline and Hazardo...

MARKET WATCH: Brent oil prices climb; NYMEX oil price holds below $53/bbl

07/08/2015 US light, sweet crude oil prices settled slightly lower on the New York market July 7 to remain under $53/bbl as Brent crude oil prices gained mode...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

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
Available Webcasts

The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP,


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.


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