MARKET WATCH: Crude oil prices climb; natural gas prices fall

Sam Fletcher
OGJ Senior Writer

HOUSTON, Nov. 2 -- Crude oil prices increased Nov. 1 as Saudi Arabia’s oil minister raised the potential ceiling for crude to $90/bbl, a level “that the typically $70-85/bbl range-bound commodity hasn't reached for over 2 years,” said analysts in the Houston office of Raymond James & Associates Inc.

“If only someone were brave enough to guess the right price for natural gas,” Raymond James analysts lamented after gas prices sank 5.3% in the same session, wiping out most of the gains since the roll-over of the contract in the New York market.

At a press conference in Singapore, Ali Al-Naimi, Saudi Arabia’s minister of petroleum resources and minerals, said consumers apparently are comfortable with crude prices of $70-90/bbl, up from the range of $70-80/bbl he previously endorsed (OGJ Online, Nov. 2, 2010). Taking a cue from that statement, market prices began to rise but failed to break out of the narrow range of $79-85/bbl in which the front-month crude contract traded through October, said Walter de Wet at Standard New York Securities Inc., the Standard Bank Group.

“The oil market drew strength yesterday from strong Purchasing Manager Indices from China, US, and UK,” De Wet reported. The front-month crude contract moved above $83/bbl in early trading Nov. 2 in New York. “It is likely oil will continue moving sideways within the narrow trading range while waiting for the Federal Reserve Bank’s announcement tomorrow,” he said.

Meanwhile, on the first trading day of November, “the broader markets remained flat in anticipation of the elections this week and Fed meeting the next couple days,” said Raymond James analysts.

Olivier Jakob at Petromatrix, Zug, Switzerland, pointed out, “The Federal Open Market Committee [the policy-making arm of the Federal Reserve Bank] starts its 2-day meeting today, and until the release of its decision tomorrow 15 min before the close of the crude oil session, trading flat price on crude will be in our opinion a very symmetrical trade subject more than anything else to the influence of positioning in front of that market input.”

The front-month crude contract “surged 93¢/bbl in the first 10 min of the Nov. 1 open session—the same pattern as the first 10 min of the previous Monday [Oct. 25],” Jakob noted. “Yes, the Chinese PMI was positive, but that was expected; and yes, the Saudi oil minister widened the acceptable price range…but those headlines came after the rally, not before it, and did not trigger any additional buying,” he said.

A trading range of $70-90 “brings by extrapolation to a midpoint at $80/bbl rather than the previous $75/bbl but does not differ too much from the 2010 actual range of $70-87/bbl,” Jakob said. “As to whether the price range is good for the world economy, we will just note that if the FOMC is currently meeting to decide on a massive interventionist plan, it is because the US economy growth is not strong enough and if the world is engaged in a currency war it is because there is not enough room for everybody to grow reasonably.”

Jakob said, “While the focus is on the additional buying power of the US Fed, Russian crude oil production has reached a new post-Soviet record in October; the Chinese are testing the first crude oil shipments on the new 300,000 b/d pipeline from Russia (the expected quantity for next year, the capacity of the pipeline is expected at double that rate); and the Brazilians are starting the first pilot production from the giant Tupi field only 3 years after discovery.” Brazil also announced last week the Libra field reserves (8-15 billion bbl) will be even bigger than Tupi (5-8 billion bbl). “That would make Libra the largest oil discovery in the Americas since Cantarell in 1976 and will contribute to push peak oil a little further back,” Jakob observed.

Energy prices
The December and January contracts for benchmark US sweet, light crudes both increased by $1.52 on Nov. 1 to respective closings of $82.95/bb and $83.67/bbl on the New York Mercantile Exchange.

On the US spot market, WTI at Cushing, Okla., rose the same amount to $82.95/bbl, in step with the front-month futures price. The new front-month December contract for heating oil bumped up 4¢ to $2.28/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month gained 3.35¢ to $2.09/gal.

The December natural gas contract fell 20.6¢ to $3.83/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated 9¢ to $3.43/MMbtu.

In London, the December IPE contract for North Sea Brent crude was up $1.47 to $84.62/bbl. Gas oil for November jumped $11.50 to $712.25/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes gained $1.13 to $80.55/bbl. So far this year, OPEC’s basket price has averaged $75.72/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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

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

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When 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


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

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