MARKET WATCH: Crude, natural gas prices rise before Easter holiday

Sam Fletcher
OGJ Senior Writer

HOUSTON, Apr. 25 -- Energy prices continued rising Apr. 21 with the front-month crude contract up 1.4% and the broader equity market up 0.5% on another round of impressive corporate earnings prior to Good Friday when the New York market closed for the long Easter weekend.

Supply-cuts by Saudi Arabia, increased demand for crude, and the declining US dollar helped prices gain $2.63/bbl, or 2.4%, during last week, said Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston. “The bullish sentiment probably exaggerated the move a bit on [Apr. 21] as the volumes were thin due to the holiday week, and prices are likely to once again come under pressure on fears of demand-destruction due to the prevailing high price levels,” Sharma reported.

Raymond James & Associates Inc. analysts in Houston said that recent crude prices “tested highs achieved earlier this month as unrest intensified in Syria, Yemen, and post-election Nigeria. Meanwhile, Saudi Arabia announced it has no intention to expand its production capacity above 12.5 million b/d, deflating rumors that it was considering boosting capacity to 15 million b/d.”

Both crude and natural gas prices were higher in early trading Apr. 25. The front-month natural gas contract increased 2.4% in New York on a lower-than-expected storage injection (OGJ Online, Apr. 21, 2011).

Sharma said, “The recent price support has mainly been a demand story as below-normal nuclear generation (even for the seasonal maintenance period), early cooling demand in the South, and strong cash-markets due to the overall higher industrial demand drove prices 20.8¢[/MMbtu], or 5%, higher week-over-week.”

Meanwhile, Olivier Jakob at Petromatrix, Zug, Switzerland, said, “The problem of the Standard & Poor’s 500 Index has not changed. The financials, which represent 16% of the index, are still deeply in the red (down 55%) compared to 2007, hence for the index to climb back to the 2007 levels requires a very strong performance from the other sectors, and in particular from energy, which represents 13% of the index. Compared to 2007, the energy sector is up 36% and is the best performing sector.”

The US Federal Reserve System, Jakob noted, “claims that the rising S&P is proof of the success of its ‘quantitative easing’ (QE) policies, but the rise of the S&P has a lot to do with the higher valuation of the energy sector, something which is dependent on higher oil prices.” He said, “That is the whole paradox: the ‘wealth creation’ claimed by the US Fed through the higher S&P has only been possible through higher oil prices, which is by itself an additional ‘tax’ on the US consumer and offsets much of the wealth effect of the higher stock index. It also means that the S&P 500 Index will suffer from any correction of the oil prices. This dependency of the S&P 500 on oil prices is a systemic risk, which will need to be taken into account in any commodity volatility linked to any QE statements from the Fed” in an unprecedented press conference scheduled after its board meeting Apr. 27.

“While the US Fed continues to force liquidity into the hands of primary dealers, the US commercial banks continue to shove cash into the vaults rather than into the economy,” Jakob reiterated. “The amount of cash held by US commercial banks has risen to a new all-time record high and is $533 billion higher than at the start of the year and $342 billion higher than last year in the same week, or $580 billion higher than in the same 2009 week.”

Since the start of its primary open market operations in March 2009 to stimulate the US economy, the federal reserve has injected a total $909 billion liquidity through the primary dealers, he said.

Energy prices
The June and July contracts for benchmark US light, sweet crudes each gained 84¢ Apr. 21, to $112.29/bbl and $112.75/bbl, respectively, on the New York Mercantile Exchange.
US spot market prices for crude and natural gas were not available.

Heating oil for May delivery dropped 2.22¢ to $3.20/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month increased 3.13¢ to $3.31/gal. The May natural gas contract bumped up 10.3¢ to $4.41/MMbtu on NYMEX.

In London, the June IPE contract for North Sea Brent crude rose 14¢ to $123.99/bbl. Gas oil for May lost $6.50 to $1,014/tonne.

Updated information on the price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes was unavailable.

Contact Sam Fletcher at samf@ogjonline.com

Related Articles

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 ...

MARKET WATCH: Oil prices fall on uncertain timing for US stimulus cuts

08/22/2013 Crude oil futures fell in trading Aug. 21 on the New York market after the release of minutes from the Federal Reserve’s policy meeting failed to p...

White Papers

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

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


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


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

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