MARKET WATCH: Crude oil tops $86/bbl for 18-month high

Sam Fletcher
OGJ Senior Writer

HOUSTON, Apr. 6 -- The front-month crude oil contract jumped above $86/bbl Apr. 5 to the highest price since Oct. 8, 2008, in the New York market with industry and government data indicating the US economy is on its way to recovery.

“Crude posted a solid gain of 2% mainly due to the dollar's weakness and better-than-expected housing data,” said analysts in the Houston office of Raymond James & Associates Inc.

The natural gas futures price jumped by 4.7% “in anticipation of stronger industrial demand for the fuel,” said analysts at Pritchard Capital Partners LLC in New Orleans. However, both crude and gas were relatively flat in early trading Apr. 6.

When the market was closed Apr. 2 for the Good Friday holiday, the US Department of Labor reported 162,000 new jobs, including 48,000 temporary workers employed for the census survey—the largest gain in more than 3 years, said Raymond James analysts.

Pritchard Capital Partners reported, “The Institute for Supply Management index for nonmanufacturing businesses also rose to 55.4 in March from 53 in February, exceeding the consensus estimate of 54.”

They said, “The euro has lost roughly 10% of its value vs. the dollar since December, when the severity of Greece’s financial problems increased and, more recently, when the International Monetary Fund cut its growth forecasts for Germany.”

Olivier Jakob at Petromatrix, Zug, Switzerland, noted, “West Texas Intermediate has risen about $7/bbl in 5 days and that makes $90/bbl a possible technical target if the momentum can be maintained for a few more days. However, with the gasoline crack eroding in the flat price rally, we would not want to be long at $90/bbl WTI as price reversals could be quick once the speculative profit-taking starts to kick in (technical markets tend to fall faster then they rise).”

Jakob said, “Higher oil prices will be felt at the fuel pump, and the gasoline crack continues to erode but with some shift to the heating oil crack. Winter has been long and tough, and the European consumer has drawn down stocks, but we remain skeptical about the rate of replenishment that will take place at current prices when unemployment in Europe has not yet peaked.”

He said, “The challenge for technical and momentum traders is to maintain a momentum trade in an insecure fundamental picture that can trigger reversal in exogenous markets. That is making for trades that have shorter time duration.”

Meanwhile, the Wall Street Journal reported Apr. 5 the US Department of Energy has discovered it has been overstating its monthly US natural gas production data and is preparing to make large revisions. It said the DOE’s Energy Information Administration uncovered a fundamental flaw in its method of data collection that does not reflect production swings among hundreds of smaller producers. It said EIA plans to change methodology this month. An earlier review of EIA's weekly oil inventory report also uncovered errors, news sources said.

Energy prices
The May contract for benchmark US sweet, light crudes climbed $1.75 to $86.62/bbl on the New York Mercantile Exchange. The June contract gained $1.79 to $87.13/bbl. In a rare move on the US spot market, WTI at Cushing, Okla., pulled ahead of the front-month crude futures price, up $1.95 to $86.82/bbl. Heating oil for May delivery escalated by 5.08¢ to $2.27/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month increased by 2.65¢ to $2.35/gal. The May natural gas contract jumped by 19.1¢ to $4.28/MMbtu on NYMEX.

In London, the May IPE contract for North Sea Brent crude was up $1.87 to $85.88/bbl. Gas oil for April gained $17 to $721/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes increased by $1.38 to $81.31/bbl. So far this year, OPEC’s basket price has averaged $75.65/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

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...

MARKET WATCH: Oil, natural gas close up in waffling markets

08/23/2013 The October contract for benchmark US light, sweet crudes on the New York Mercantile Exchange increased $1.18 to $105.03/bbl Aug. 22. The November ...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

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