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

Encana books impairment charge, maintains 2015 budget

07/27/2015 Encana Corp., Calgary, reported a $1.3 billion impairment charge for the second quarter, which executives said reflected a decline in oil and natur...

First bidding round showed Mexico reform challenges, House panel told

07/27/2015 An apparently disappointing first round of bids for oil and gas exploration rights revealed problems that require attention if Mexico’s dramatic en...

MARKET WATCH: Oil futures stay below $49/bbl after gain in US rig count

07/27/2015 Light, sweet crude oil futures prices fell modestly July 24 to remain under $49/bbl on the New York market after Baker Hughes Inc. reported the US ...

EPA proposes voluntary methane reduction program for gas industry

07/24/2015 The US Environmental Protection Agency proposed a voluntary methane reduction program for the natural gas industry that would allow companies to ma...

Petrobras workers stage 24-hr strike

07/24/2015 Workers at beleaguered Petroleo Brasileiro SA (Petrobras) staged a 24-hr strike across Brazil to protest plans by the state-owned company to liquid...

MARKET WATCH: Oil futures hover below $49/bbl

07/24/2015 Light, sweet crude oil futures prices settled under $49/bbl July 23 on the New York market, which means US prices have slid more than 20% since the...

EQT reports high IP from Utica dry gas well

07/24/2015 EQT Corp., Pittsburgh, said a deep, dry gas Utica well averaged 72.9 MMcfd with an average flowing casing pressure of 8,641 psi during a 24-hr deli...

Separate Murkowski bill addresses crude exports, OCS revenue sharing

07/24/2015 US Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-Alas.) introduced legislation that would end the ban on US crude oil expor...

OGUK updates guidelines for well abandonments

07/23/2015

Oil & Gas UK has released updated guidelines for abandonment of wells, including cost estimates.

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.

register:WEBCAST



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

register:WEBCAST


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, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


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.

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