MARKET WATCH: Crude oil price makes small recovery

Sam Fletcher
OGJ Senior Writer

HOUSTON, June 9 -- The price of crude for July delivery increased June 8 for the first time in 3 days in the New York market after Federal Reserve Chairman Ben Bernanke reassured nervous investors the economic recovery is on track.

But after shooting up 16% in 4 days of consecutive gains, the front-month natural gas futures contract dropped 2.2% on forecasts of cooler weather in the US Northeast and Midwest.

“The euro’s advance against the dollar for the first time in 4 days, also boosted [crude] prices,” said Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston. “As the recovery remains on track, demand for the fuel in the US will increase, providing further price support.”

He said, “The forecasts for moderating temperatures over the next few days also weighed on [gas] prices. The projections for hyperactive hurricane season and higher industrial demand have brought the bulls back to the market, although, we believe that a bigger pull back in onshore drilling activity is required to support any sustained appreciation in prices.”

Olivier Jakob at Petromatrix, Zug, Switzerland, reported, “On the geopolitical side, the [United Nations] will vote today the new sanctions against Iran. It will very probably not be a unanimous vote but a majority one; expectations are, however, strong that it will pass without a Chinese veto.”

Jakob said, “The sanctions are relatively mild and still far away from an embargo of gasoline to Iran. Iran is anyway planning to remove fuel subsidies at the end of September and as time passes on, it will be better prepared for the day the western powers try to force a tougher sanction regime (i.e. on gasoline to Iran).

OPEC outlook
In its latest monthly report, the Organization of Petroleum Exporting Countries said the average price of its reference basket of members’ crudes fell below $67/bbl on May 25—the lowest level since early October—underscoring market volatility as uncertainties about oil demand reemerged amid disappointing macroeconomic data and concerns about the impact of Europe’s debt crisis. The OPEC reference basket averaged $74.48/bbl in May, down 9.5% from April while the front-month crude contract in New York dropped 12% as the market turned bearish. “Speculative activity on the crude futures market also declined as money managers cut net long positions by almost 60% in May,” said OPEC officials.

The average price for OPEC’s basket of 12 reference crudes gained 27¢ to $70.11/bbl on June 8.

OPEC revised its outlook for 2010 world economic growth up to 3.8% from 3.5% last month, primarily because of Japan’s better-than-expected performance in the first quarter with strong exports to Asia. Japan is now forecast to grow 2.7% in 2010, compared to a previous 1.5%.

Growth for the euro-zone increased slightly to 0.7% from 0.6%, while the US remained unchanged. China growth was left unchanged at 9.5%, while India was increased to 7.3% and Russia to 4%. “While the global economy seems to be enjoying solid momentum in the first half, concerns about growth in the second half remain due to euro-zone sovereign debt problem, the ability of China to avoid overheating, and the still high unemployment in Organization for Economic Cooperation and Development countries,” said members of the cartel.

OPEC officials reported recent data indicate demand growth has been slightly higher than estimated in the first half of the year. However, they said, “An expected moderation in the pace of the economic recovery is likely to impact demand growth forecasts for the second half. Total demand growth is still expected to come from non-OECD as growth in the OECD is expected to remain negative.”

Officials said a combination of growing product demand along with lower crude cost in May lifted refining margins across the globe and encouraged refiners, particularly in the US, to increase throughputs. With the start of the driving season and predictions for a more active hurricane season, gasoline market sentiment may strengthen further, they said. However, due to comfortable stocks and persisting spare refinery capacity across the globe, product markets are not expected to lead the market and support crude over the coming months.

OPEC said demand for its crude is expected to have averaged 28.94 million b/d in 2009, down 2.4 million b/d from 2008. Demand in 2010 is expected to average 28.77 million b/d, down 70,000 b/d from the previous assessment and down 175,000 b/d from the previous year. “This would leave no room for additional crude oil supplies in the market,” officials said.

US inventories
The Energy Information Administration said June 9 commercial US crude inventories fell 1.8 million bbl to 361.4 million bbl in the week ended June 4. Gasoline stocks were unchanged at 219 million bbl. Distillate fuel inventories increased by 1.8 million bbl to 154.8 million bbl.

Total commercial petroleum inventories decreased by 500,000 bbl in the latest week. Total products supplied over the last 4-weeks averaged 19.7 million b/d, a 7.3% increase from the comparable period last year. In the latest 4 weeks, gasoline demand averaged 9.1 million b/d, down 1% from a year ago, while distillate demand was up 12.1% to 4 million b/d, EIA said.

The American Petroleum Institute earlier reported US crude stocks dropped 4.5 million bbl to 358.2 million bbl in the week ended June 4. It said gasoline inventories increased 1.2 million bbl to 219 million bbl in the same period while distillate stocks jumped 3 million bbl to 151.5 million bbl.

Crude imports into the US increased by 80,000 b/d to 9.5 million b/d last week, EIA reported. In the 4 weeks through June 4, imports averaged 9.7 million b/d, up 641,000 b/d from the same period last year.

The input of crude into US refineries rose 82,000 b/d to 15.2 million b/d in that week, with units operating at 89.1% of capacity. Gasoline production dropped to 9.1 million b/d, and distillate production increased to 4.4 million b/d.

Energy prices
The July contract for benchmark US light, sweet crudes regained 55¢ to $71.99/bbl June 8 on the New York Mercantile Exchange. The August contract took back 29¢ to $73.06/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 55¢ to $71.99/bbl. Heating oil for July delivery slipped 0.3¢ but finished virtually unchanged at a rounded $1.97/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month declined 0.58¢ but was essentially unchanged at $1.99/gal.

The July natural gas contract dropped 10.8¢ to $4.81/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., bumped up 10.5¢ to $4.85/MMbtu.

In London, the July IPE contract for North Sea Brent crude increased 18¢ to $72.30/bbl. Gas oil for June gained $4 to $625/tonne.

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

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