MARKET WATCH: Dollar, energy prices fall; unemployment rises

Sam Fletcher
OGJ Senior Writer

HOUSTON, Oct. 15 -- Energy prices slumped once more Oct. 14 in the New York market, pulled down by the decline in the broader equities market as an increase in new claims for unemployment assistance last week fed concerns about economic recovery.

Natural gas “was the biggest underperformer, falling 0.8% on the day as an injection of 91 bcf cut the year-over-year storage deficit by 31 to 118 bcf,” said analysts in the Houston office of Raymond James & Associates Inc. “As a result, energy stocks performed in line with the broader market,” they reported.

Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston, said, “Jobless claims unexpectedly rose to 462,000 last week indicating that the US job market is still struggling. The dollar’s 0.7% decline against the euro also could not stop prices from ending lower yesterday due to the overall weak demand for the fuel. We expect that anemic demand combined with the high inventory level, which is 13% above the 5-year average, will continue to weigh on prices.”

The Energy Information Administration reported the injection of 91 bcf of natural gas into US underground storage in the week ended Oct. 8. That brought working gas in storage to 3.59 tcf, down 118 bcf from the same period a year ago but 247 bcf above the 5-year average (OGJ Online, Oct. 14, 2010).

EIA said inventories of benchmark US sweet, light crudes dipped by 400,000 bbl to 360.5 million bbl last week. Gasoline stocks dropped 1.8 million bbl to 218.2 million bbl in the same period. Distillate fuel inventories decreased 300,000 bbl to 172.2 million bbl.

Olivier Jakob at Petromatrix in Zug, Switzerland, said, “Stocks of visible products (crude plus clean petroleum products) had a draw of 3.2 million bbl and still have a long way to go before reaching the levels of last year.” He noted a 1.5 million bbl reduction of crude stocks on the “discounted” West Coast, compared with small builds in the Midwest and along the Gulf Coast that put them “close to the highs of the year.”

Jakob reported no shortage of crude oil stocks, although imports from Canada into the Midwest are still limited by the Enbridge Energy Partners LP’s reactivated 670,000 b/d 6A crude pipeline that was shut-in Sept. 9 because of a leak (OGJ Online, Oct. 12, 2010). He said, “With refinery runs seasonally off their peaks, the Midwest had a 1.3 million bbl stock build with Cushing, Okla., unchanged.” Approaching winter demand, heating oil stocks continued to build and are higher than a year ago,” he said.

“Gasoline stocks had a 1.8 million bbl stock draw and have lost 8 million bbl over the last 3 weeks. The overall stocks are still however at a multiyear high for the season,” Jakob said. “The strikes in France are extending and could start to have an impact on gasoline exports to the US. We are, however, out of the main driving season in the US, so refiners have plenty of time to rectify a drop of imports due to France. The US imports more gasoline and components from India than from France, and the impact on the US will really depend on whether the strikes are also extending to [other] ports. If the French ports all shut down as well, there will be little need to import gasoline into France to offset the loss of refinery production.”

Another report Oct. 15 showed US retail sales were up in September, the third increase in as many months after decline in May and June.

In other news, Federal Reserve Chairman Ben Bernanke said Oct. 15 the Fed is prepared to buy Treasury bonds in another effort to rejuvenate the economy, but Fed policymakers are not sure how big such a program should be. They are expected to announce a new Treasury purchase program at their next meeting Nov. 2-3.

Adam Sieminski, chief energy economist for Deutsche Bank in Washington, DC, said Asia and the Middle East are expected to account for nearly all of the world's oil demand growth over the next few years, “which creates the potential for surprises.”

He said, “China's record crude oil imports in September are a reminder of the importance of the country's strategic and commercial stockpiling for the physical market as well as to market sentiment. New strategic petroleum reserve [storage] tanks that will be ready next year pose an opportunity for China to add meaningfully to strategic reserves.”

Meanwhile, Sieminski said, “There is growing debate among meteorologists about the impact of what appears to be rapidly developing strong La Niña conditions on the winter ahead. The consensus is that it will be slightly warmer than normal one, which would imply weaker US natural gas demand. But La Nina conditions are associated with cold winters.”

At Standard New York Securities Inc., part of the Standard Bank Group, analyst Walter de Wet said, “The Organization of Petroleum Exporting Countries decided to maintain the production quotas unchanged on their meeting yesterday. Understandably, some members voiced their concerns about dollar devaluation, as it hurts their real income from oil exports (OGJ Online, Oct. 14, 2010).

Energy prices
The November contract for benchmark US light, sweet crudes declined 32¢ to $82.69/bbl Oct. 14 on the New York Mercantile Exchange. The December contract decreased 38¢ to $83.36/bbl. On the US spot market, West Texas Intermediate at Cushing was down 32¢ to $82.69/bbl. Heating oil for November delivery lost 1.68¢ to $2.28/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month dropped 2.96¢ to $2.14/gal.

The November contract for natural gas was down 3.9¢ to $3.66/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., fell 6¢ to $3.57/MMbtu.

In London, the November IPE contract for North Sea Brent declined 11¢ to $84.53/bbl. Gas oil for November lost $1.75 to $723.75/tonne.

The average price for OPEC’s basket of 12 benchmark crudes increased 5¢ to $80.95/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

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by

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

Available Webcasts



The Future of US Refining

When 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


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

When Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST



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


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