MARKET WATCH: WTI price down; Brent up

Sam Fletcher
OGJ Senior Writer

HOUSTON, Feb. 10 -- Despite the weak dollar, the front-month contract price for benchmark US crude continued to decline, down 0.3% Feb. 9 in the New York market while North Sea Brent rebounded above $101/bbl in London, widening its record premium over West Texas Intermediate above $15/bbl.

Analysts in the Houston office of Raymond James & Associates Inc. reported the WTI price was brought down by a bearish government report of increased US inventories of crude and petroleum products. Brent on the other hand increased “on persistent concerns for the situation in Egypt.” They reported natural gas gained a marginal 0.1%. Prices for both crude and gas were down in early trading Feb. 10.

James Zhang at Standard New York Securities Inc., the Standard Bank Group, said, “The term structures for WTI weakened further, while the term structures for Brent strengthened on the back of the divergence in flat prices of WTI and Brent.”

Zhang said, “Credit default swaps for the 5-year Egyptian government bond have reversed the recent declining trend, amid news reports of friction between the Saudi Arabian and US governments over the treatment of Egyptian President Hosni Mubarak, and fresh calls for further protests in the country. Adding to the concerns in the region is the news that a [very large crude carrier], carrying 2 million bbl of crude en route to the US Gulf Coast was hijacked yesterday off the coast of Oman. These events lent some support to the oil price.”

Olivier Jakob at Petromatrix in Zug, Switzerland, said, “The momentum on the Brent premium to WTI is not slowing down and reached yesterday a new extreme, widening by more than $2/bbl on the day. With the reformulated blend stock for oxygenate blending (RBOB) and heating oil crack debased from WTI and rebased to Brent (as an alternative to US Gulf Coast crude oil, where Light Louisiana Sweet is now trading at more than $16/bbl over WTI), the US consumer is not seeing any benefit from the US benchmark moving at record discount to Brent.”

Instead US motorists are paying at the pump “the same price as in early 2008, while the European consumer is paying the same price as in the summer of 2008 and the Chinese the highest price ever,” said Jakob. Moreover, he said, “We still have to consider what crude oil at $100/bbl can do to the demand for petroleum. The demand reaction to higher prices is always difficult to estimate (many leading economists thought in 2008 that oil at $170/bbl would not have any impact on oil demand) but should not be discounted.”

US inventories
The Energy Information Administration reported Feb. 10 the withdrawal of 209 bcf of natural gas from US underground storage in the week ended Feb. 4, exceeding the Wall Street consensus for a drop of 195 bcf. That left 2.1 tcf of working gas in storage. That is 98 bcf below the same period last year and 45 bcf below the 5-year average.

EIA earlier reported benchmark US crude inventories increased 1.9 million bbl to 345.1 million bbl in that same week, just below the Wall Street consensus for a 2 million bbl build. Gasoline stocks rose 4.7 million bbl to 240.9 million bbl, exceeding analysts’ expectations for a 2.6 million bbl increase. Distillate fuel inventories gained 300,000 bbl to 164.4 million bbl, while the market was anticipating a 1 million bbl decline, EIA officials said (OGJ Online, Feb. 9, 2011).

Government data show “demand for clean petroleum products is even lower than a year ago, which was already a multiyear low. It was snowing a lot last year in early February (that was when the term ‘snowmaggedon’ was invented), hence the current lack of demand growth can’t be blamed on the snow. US implied demand for clean petroleum stocks is lower than a year ago, but refinery runs are up 650,000 b/d, hence stocks continue to build,” Jakob said.

As a result, inventories “are fast approaching the multiyear highs for any season last seen in September of last year when the lack of hurricanes failed to produce any draws on stocks. The storage capacity in the US will soon start to be limited. [That’s] not something to really expect when prices are trying to test the level that triggers full demand destruction,” he said.

Energy prices
The March contract for benchmark US sweet, light crudes declined 23¢ to $86.71/bbl Feb. 9 on the New York Mercantile Exchange. The April contract eased down 14¢ to $90.10/bbl. Subsequent monthly crude contracts through March 2012 posted price increases that remained in contango. On the US spot market, WTI at Cushing, Okla., was down 23¢ to $86.71/bbl.

Heating oil for March delivery increased 3.71¢ to $2.77/gal on NYMEX. RBOB for the same month rose 3.18¢ to $2.53/gal.

The March contract for natural gas inched up 0.4¢ but was virtually unchanged at a rounded closing price of $4.04/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., fell 11.5¢ to $4.13/MMbtu.

In London, the March IPE contract for North Sea Brent gained $1.90 to $101.82/bbl. Gas oil for February advanced $3.50 to $853.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up 81¢ to $96.93/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Market watchers' adjustments offer hints of recovery

01/26/2015 Because markets look ahead, changes in standard forecasts offer potentially important signals during storms such as the one now pummeling the oil a...

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...
White Papers

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

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

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


Cognitive Solutions for Upstream Oil and Gas

When 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

When 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



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

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