MARKET WATCH: Oil prices remain mixed at high levels

Sam Fletcher
Senior Writer

HOUSTON, Feb. 21 -- The front-month March contract dipped lower Feb. 18 in the New York market, but the April contract continued to climb with subsequent months posting gains but still in contango at least through April 2012.

“Oil traded sideways on Friday at an elevated level amid continuous tensions in the Middle East and North Africa (MENA) region,” said James Zhang at Standard New York Securities Inc., the Standard Bank Group. “The term structures for both West Texas Intermediate and North Sea Brent also weakened.”

He added, “Over the weekend, the turmoil in Libya appears to have escalated, which has sent oil higher this morning [Feb. 21]. Libya, a member of the Organization of Petroleum Exporting Countries, produced around 1.6 million b/d of crude oil during 2010, of which approximately 1.5 million b/d were exported, mostly to Europe. Therefore, unlike Egypt the situation in Libya has the potential to have a big impact on global oil supply. Latest news that has emerged is that oil output has stopped at Libya’s Nafoora field as workers have gone on strike.”

Zhang also noted China announced a further 0.5% increase on the national bank’s reserve ratio to a new record of 19.5%, effective Feb. 24. “This is the eighth time since the beginning of 2010 that China increased the bank’s reserve ratio. China also increased its benchmark interest rate by 25 basis points the week before last. Given that inflation remains high, the market expects further tightening this year,” he said.

US financial markets are closed Feb. 21 for the US Presidents Day holiday. “The political turmoil in the MENA regions will continue to lead the market. However, trading volumes are likely to be relatively low as the International Petroleum Week is scheduled for this week in London with many market participants attending,” said Zhang.

At KBC Energy Economics, a division of KBC Advanced Technologies PLC, analysts said, “Geopolitical tensions have pushed oil prices, represented by international benchmark grade North Sea Brent blend, above $100/bbl. Even higher prices cannot be ruled out, particularly if the wave of unrest in the Middle East that has toppled regimes in Tunisia and Egypt and has now affected Bahrain, Libya, Iran, Iraq, and Yemen were to lead to instability in larger gulf oil producers.”

The International Energy Agency in Paris has said $100/bbl oil threatens the global economic recovery. However, KBC analysts claim, “There is no single oil price threshold that will instantly throw world oil demand into reverse and the world back into recession. Indeed, because of the lag between oil prices and gasoline and electricity prices, the impact of $100/bbl oil will take several months to filter through into the economic data.”

Also, because oil prices have been driven towards $100/bbl largely by the strength of economic and oil demand growth rather than any supply bottleneck, they said, “We are unlikely to repeat the boom-bust cycle of 2008. Although there is clearly a geopolitical risk premium of perhaps $5-10/bbl in the oil price, oil demand growth in emerging markets has been the key driver for higher prices and these economies (Brazil, Russia, India, China, and developing Asia) show no signs of slowdown.”

Nevertheless, KBC analysts said, “Past history suggests that oil prices upwards of $90/bbl, and certainly above $100, do generate a demand response in key oil consumers.”

Energy prices
The March contract for benchmark US light, sweet crudes dropped 16¢ to $86.20/bbl Feb. 19 on the New York Mercantile Exchange, but the April contract gained 87¢ to $89.71/bbl. On the US spot market, WTI at Cushing, Okla., was down 16¢ to $86.20/bbl.

Heating oil for March delivery declined 1.95¢ to $2.71/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month, however, increased 2.36¢ to $2.55/gal.

The March contract for natural gas inched up 0.8¢ to $3.88/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 3.5¢ to $3.84/MMbtu.

In London, the April IPE contract for Brent dipped 7¢ to $102.52/bbl. Gas oil for March fell $12.75 to $860.75/tonne.

The average price for OPEC’s basket of 12 benchmark crudes dropped 69¢ to $99.08/bbl. So far this year, OPEC’s basket price has averaged $94.76/bbl.

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

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