MARKET WATCH: Crude oil, natural gas prices take tumble

Sam Fletcher
OGJ Senior Writer

HOUSTON, Mar. 15 -- Oil and gas prices fell Mar. 12, with crude dropping to the lowest settlement since Mar. 4 but still above $81/bbl as the front-month contract ended its latest rally in the New York market.

On Mar. 15, analysts in the Houston office of Raymond James & Associates Inc. reported crude was below $81/bbl in early trading, continuing the retreat “on renewed concerns the recent rally may have outpaced demand fundamentals.” They said, “Separately, reports showing the Organization of Petroleum Exporting Countries increased drilling at the fastest rate in over 2½ years in January-February may place pressure on prices. The spike in the rig count comes alongside news that member nations, excluding Iraq, exceeded production quotas by approximately 1.9 million b/d during the month of February.” Finally, they said natural gas was down more than 1% in early trading after hitting fresh year-to-date lows Mar. 12 “to find itself right on its 200-day moving average.”

In New Orleans, analysts at Pritchard Capital Partners LLC said, “Crude sold off 1.1% on worse-than-expected consumer confidence numbers. Consumer sentiment index dropped to 72.5 from February’s figure of 73.6, while the market was expecting that the index [would] rise to 74. Crude oil dropped 0.3% last week, but is up 73% year-over-year.”

They said, “The market also overlooked the upward revision of 70,000 b/d in global fuel demand forecast by the International Energy Agency. Revised forecast now stands at 86.6 million b/d, a gain of 1.6 million b/d, or 1.8%, from 2009 levels. The IEA report was not all positive, as it revised Organization for Economic Cooperation and Development demand downward by 120,000 b/d on a weaker start of the year than previously forecasted (OGJ Online, Mar. 12, 2010).”

Pritchard Capital analysts said, “IEA projects that most of the global demand will come from emerging markets outside of OECD, revising its projections upward for those markets by 190,000 b/d, while China alone accounted for 130,000 b/d of this revision. IEA estimates that China will account for almost a third of global oil demand growth this year. While IEA forecasts an increase in oil demand, it also projects that supply will post a slightly larger gain in 2010. Supply surged in February due to higher OPEC and non-OPEC production generating an increase of 900,000 b/d, while OPEC’s 195,000 b/d increase was largely a result of higher Iraqi output.”

Olivier Jakob at Petromatrix, Zug, Switzerland, said, “The dollar index was stable for most of the week but started to fade [Mar. 12]. It is still within the narrow range set over the last 5 weeks, and one of the key focus this week will be on the [US Federal Reserve interest rates] decision and comments” on Mar. 16.

He said cash held by US banks increased slightly last week “close to the historic highs set in early February.” Jakob said, “US banks are hoarding $500 billion more cash than last year and $1 trillion more than in 2008 or 2007. Meanwhile, commercial and industrial loans continue to slowly slide lower week after week. The Fed might have used the money printing machine without parsimony, but for now a lot of the printed bills are still being hoarded rather than making their way back into the economy.”

Energy prices
The April contract for benchmark US light, sweet crudes rose as high as $83.16/bbl on Mar. 12 before closing at $81.24/bbl, down 87¢ for the day on the New York Mercantile Exchange. The May contract dropped 89¢ to $81.54/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 87¢ to $81.24/bbl. Heating oil for April delivery retreated 2.1¢ to $2.09/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month declined 1.7¢ to $2.26/gal.

The April natural gas contract fell 4¢ to $4.40/MMbtu on NYMEX—“the lowest closing price since Nov. 19 as the market anticipates lower weather-driven demand in light of milder-than-normal temperature forecasts,” Pritchard Capital Partners said. “There are only 3 weeks left in end-of-withdrawal season with a decent possibility that we might see an injection by the third week of March.” Weather on an average this week is expected to continue to be warmer than normal, they said.

On the US spot market, gas at Henry Hub, La., dropped 12.5¢ to $4.36/MMbtu.

In London, the April IPE contract for North Sea Brent crude lost 89¢ to $79.39/bbl. Gas oil for April gained 50¢ to $665.75/tonne.

The average price for OPEC’s basket of 12 reference crudes slipped 2¢ to $77.74/bbl. So far this year, the basket of OPEC crudes has average $75/bbl, compared with an average $61.06/bbl for all of 2009.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Market watchers' adjustments offer hints of recovery

01/26/2015 Because markets look ahead, changes in standard forecasts offer potentially important signals during storms such as the one now pummeling the oil a...

A message from Oil & Gas Journal

12/15/2014

An important transition occurred during production of this issue of Unconventional Oil & Gas Report.

MARKET WATCH: Crude oil prices down as US government shutdown lingers

10/16/2013 The front month crude oil contract on the New York market dropped to the lowest level on Oct. 15 since it last settled below $100/bbl on July 2.

MARKET WATCH: Crude oil traded higher amid Washington budget talks

10/15/2013 Crude oil futures prices traded higher on the New York market Oct. 14 as US lawmakers reported progress in ongoing efforts toward reaching an agree...

MARKET WATCH: Oil prices close down at end of volatile week

10/14/2013 The NYMEX November crude contract lost 99¢ on Oct. 11, settling at $102.02/bbl ending a week of volatile trading. The December contract fell 83¢ to...

MARKET WATCH: Oil prices continue falling as Syria risk apparently lessens

09/17/2013 Oil futures prices reached their lowest level in 3 weeks with the Sept. 16 closing while the US and Russia agreed to terms under which Syria is exp...

MARKET WATCH: Oil prices rebound slightly awaiting US decision on Syria

09/04/2013 Oil prices climbed on New York and London markets Sept. 3 in response to comments indicating key US lawmakers will support US President Barack Obam...

MARKET WATCH: Syria crisis puts pressure on some oil markets

08/27/2013 Crude oil prices in world markets edged upwards Aug. 26 on reports that “tolerance of the West for what’s taking place in Syria appears to be comin...

MARKET WATCH: Oil futures rise Aug. 23 on Lebanon violence

08/26/2013 Oil futures prices rose on the New York market Aug. 23, and traders attributed the increase to escalating violence in the Middle East that added to...
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


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

When 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



On Demand

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


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

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