MARKET WATCH: Crude oil falls below $72/bbl to 11-week low

Sam Fletcher
OGJ Senior Writer

HOUSTON, Aug. 25 -- Energy prices continued to tumble Aug. 24 with crude dropping 2% to an 11-week low below $72/bbl in the New York market after the National Association of Realtors reported sales of existing US homes plunged 27% to a 15-year low in July with expiration of the home-buying tax credit. Natural gas prices dipped 0.3%.

It marked the fifth successive session the price of the front-month crude contract has declined. “Dismal housing data set the tone for markets,” said analysts in the Houston office of Raymond James & Associates Inc. “Consequently, the Dow [Jones Industrial Average] made a brief appearance below the 10,000 mark before rebounding slightly to finish the day down 1.3%.” Energy prices followed the equity market's reaction to macro economic concerns and growing petroleum stockpiles that could signal a second dip in the recession.

However, analysts at Standard New York Securities Inc., part of the Standard Bank Group Ltd., reported “a brief revival” of crude prices in early trading Aug. 25, “partly due to dollar weakness.” Nevertheless, they said, “Dollar weakness has been abating, and global growth concerns now weigh on oil prices.”

Low home sales are just the latest in “the trend of macroeconomic data coming out worse than expected,” said Olivier Jakob at Petromatrix, Zug, Switzerland. Compared with the same period last year, sales are down heavily across the regions. “And that is despite the fixed mortgage rates falling to a record low during July (30-year rate),” he said.

“Given the continued deterioration in the macroeconomic data, we will continue to focus on the directional movement of the Standard & Poor’s 500 index, as the US petroleum stocks are too high to fuel any strong positive sentiment,” Jakob said.

In other news, Hurricane Danielle “is nothing to worry about as it will stay in the Mid-Atlantic,” Jakob said, “The storm off Cape Verde will be named Earl and is expected to become a strong hurricane (like Danielle), but it is expected to head north and should not be an issue for oil assets in the US Gulf of Mexico. However the National Hurricane Center currently has under watch a new disturbance that has developed right in the US gulf.” For now there is low probability it will be upgraded to tropical storm status.

US inventories
The Energy Information Administration said Aug. 25 commercial US benchmark crude inventories jumped by 4.1 million bbl to 358.3 million bbl in the week ended Aug. 20—“the third straight rise as we exit a relatively nonexistent driving season,” said Raymond James analysts. The consensus on Wall Street was for a more modest increase of 300,000 bbl. Gasoline stocks escalated 2.3 million bbl to 225.6 million bbl, whereas the market was expecting a decrease of 500,000 bbl. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories climbed 1.8 million bbl to 225.6 million bbl, exceeding traders’ expectations of a 1 million bbl build.

Imports of crude into the US increased by 320,000 b/d to 9.9 million b/d last week. In the 4 weeks through Aug. 20, crude imports averaged 9.6 million b/d, up by 589,000 b/d from the comparable period in 2009.

The input of crude into US refineries, however, declined by 348,000 b/d to 14.9 million b/d in the latest week, with units operating at 87.7% capacity. Gasoline production increased to 9.6 million b/d, while distillate fuel production increased to 4.4 million b/d.

The EIA weekly data have shown for the “past 12 consecutive weeks,” light product inventories of gasoline, distillate, and jet fuel have risen “due to high production levels, increased gasoline imports (including blend stocks), and lackluster demand,” said Jacques Rousseau, managing director of equity research, RBC Capital Markets, Reston, Va. Gasoline consumption last week was 3% higher than the comparable week last year, he said.

“After a strong second quarter, refining margins have declined sharply in August due to rising supply and lackluster demand. As a result of this weakness, we expect some refiners to lower production levels this month and coupled with the upcoming fall turnaround season (that starts in early September), lower supply should begin to reduce the current refined product inventory overhang, a potential near term positive for refining margins and stocks,” Rousseau said.

He said, “We estimate that the average US refining margin increased from approximately $7.27/bbl to $8.77/bbl over the past week (vs. an average of approximately $12/bbl in 2008 and $9/bbl in 2009).”

Energy prices
The October contract for benchmark US light, sweet crudes dropped $1.47 to $71.63/bbl Aug. 24 on the New York Mercantile Exchange. The November contract fell $1.37 to $72.36/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., broke its usual lock-step with the front-month crude futures contract and instead was down $1.89 to $71.21/bbl. Heating oil for September delivery lost 1.97¢ to $1.94/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month fell 3.16¢ to $1.84/gal.

The September natural gas contract was down 2.7¢ to $4.04/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 8¢ to $4.05/MMbtu.

In London, the October IPE contract for North Sea Brent crude fell $1.24 to $72.46/bbl. Gas oil for September lost $8.75 to $617.25/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes was down $1.24 to $69.69/bbl.

Contact Sam Fletcher at

Related Articles

AER shuts in 16 Murphy Oil sites in Peace River region for noncompliance

07/07/2015 Alberta Energy Regulator said it has shut in or partially shut in 16 sites operated by Murphy Oil Co. Ltd. in the Peace River region. The sites wer...

MARKET WATCH: NYMEX, Brent oil prices take dive on world oil oversupply concerns

07/07/2015 US light, sweet crude oil prices plummeted more than $4/bbl on the New York market July 6, marking a 5-month low, while Brent crude oil prices on t...

WAFWA: Aerial survey finds lesser prairie chicken population grew

07/06/2015 A recent range-wide aerial survey found the lesser prairie chicken population rose 25% from 2014 to 2015, the Western Association of Fish & Wil...

Buru awarded onshore Canning licenses

07/06/2015 Buru Energy Ltd., Perth, and Mitsubish Corp. have been granted two production licenses for Ungani oil field in the onshore Canning basin of Western...

Cenovus sells royalty business for $3.3 billion

07/06/2015 Cenovus Energy Inc., Calgary, inked an agreement to sell its wholly owned subsidiary Heritage Royalty LP to Ontario Teachers’ Pension Plan for gros...

CERI: Energy, operational efficiencies possible in Canadian oil, gas

07/06/2015 Measures can be taken by operators in the expanding resource-intensive Canadian oil and gas sector to improve both energy efficiency and operationa...

AGL Energy to scale back upstream gas operations


Gas retailer AGL Energy Ltd., Sydney, says it will exit the oil business and massively scaling back its upstream gas operations.

Macondo settlement seen ‘positive’ for BP

07/06/2015 BP Exploration & Production Inc.’s recent agreement to settle federal and state claims related to the 2010 Macondo blowout and spill improves t...

Emerging producers offered guidelines for governance

07/06/2015 Like most worthy endeavors, governing oil and gas activity at the national level is easier said than done-especially where oil and gas never before...
White Papers

Definitive Guide to Cybersecurity for the Oil & Gas Industry

In the Oil and Gas industry, there is no single adversary and no single threat to the information tech...

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
Available Webcasts

Better Data, Better Analytics, Better Decisions

When Tue, Oct 27, 2015

The Oil & Gas industry has large amounts of data stored in multiple systems which are purpose built for certain tasks. However, good decisions require insights based upon the data in all of these systems. These systems in turn do not talk to each other. So the process of analyzing data, gaining insights, and making decisions is a slow one and often a flawed one. Good decisions require accurate analytics and accurate analytics require superior/sustainable data quality and governance. This webinar focuses on:

  • The importance of data quality and governance
  • How technological advances are making data quality and governance sustainable in order to get the accurate analytics to make solid decisions.

Please join us for this webcast sponsored by Seven Lakes Technologies and Noah Consulting.


Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

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.


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