MARKET WATCH: Energy prices continue climbing with weak dollar

Sam Fletcher
OGJ Senior Writer

HOUSTON, June 1 -- Stronger prospects for the financial bailout of Greece pushed the euro to a 3-week high against the dollar, and the weaker dollar raised crude prices 2% on May 31 in the New York market.

“The broader market shook off weak economic data from the US to end the month on a positive note,” said analysts in the Houston office of Raymond James & Associates Inc. “Not to be outdone, natural gas rose 3% on forecasts for warmer temperatures.”

James Zhang at Standard New York Securities Inc., the Standard Bank Group, said, “Oil finished strongly on the last day of May despite soft macroeconomic data from the US.” Oil products largely tracked gains in crude with reformulated blend stock (RBOB) falling slightly behind on the New York Mercantile Exchange. The term structure for West Texas Intermediate strengthened on news the Keystone Pipeline that carries Canadian crude to Cushing, Okla., will be shut down “for a few days” to repair a leak (OGJ Online, May 31, 2011).

“Net for May, front-month WTI and Brent lost $11.23/bbl and $9.16/bbl, respectively, after contracts hit their respective 2-year highs in April,” Zhang reported. “The drops in crude prices mostly took place during the first week of May. Since then, crude has been trading in a consolidation mode in the past 3 weeks. The recent Commodity Futures Trading Commission reports reveal some of the net speculative length has diminished after the record highs at the start of May. Oil market fundamentals continue to tighten up, which poses further upside risks to oil prices.”

He noted Japan’s weekly crude throughput dropped to 2.73 milion b/d last week, the lowest level in 5 years, while commercial crude inventories remained at seasonal highs. “With weak demand for crude from Japan, Dubai crude continues to trade at a heavy discount to Brent. This is likely to make the Organization of Petroleum Exporting Countries cautious about raising production, as incremental OPEC production is more likely to be of a similar quality to Dubai crude (heavy and of high sulfur content).”

Because of a weaker dollar, US economic data “failed to impress yet again,” with declining house prices and weaker-than-expected consumer confidence. Zhang said, “China’s office Manufacturing Purchasing Managers Index (PMI) for May was reported at 52, from 52.9 in April.

With the US and Chinese economies still showing signs of softening, oil market sentiment will likely suffer, “which might keep the oil market muted for longer than thought,” Zhang said. However, with the June 8 OPEC meeting and the crucial US nonfarm payrolls report scheduled for release June 3, “volatility could shoot up,” he said. “Still, some of the weakness in the economy was caused by supply disruptions following the earthquake in Japan, which could prompt a rebound. In addition, an increasingly tight oil market poses further upside risks to the oil price in the medium term.”

Olivier Jakob at Petromatrix, Zug, Switzerland, said, “Making a positive spin out of the macroeconomic data released yesterday should be a difficult exercise for anyone. First of all the Case-Schiller Index of house prices showed a double dip, breaking the 2009 lows and falling to the lowest level since 2002. Then there was the Chicago PMI that showed the largest monthly drop since October 2008 [to the] the lowest level since November 2009.”

On top of that, he said, “The conference board confidence index showed a decline and is at the lowest level of the year.”

Jakob said, “The European side of the Atlantic was not really better. French consumer spending in April dropped 1.8% and follows a 1% [decline] in March; the drop in April being mostly on the back of a fall of 10.2% in automobile sales. The only bright spot yesterday was the German retail sales number [up] 0.6%, but that is only a positive for those who choose to ignore that the expectations were [for an increase of] 1.8%.

In other news, Jakob noted, “Today is the first day of the official hurricane season” for the Atlantic and the Gulf of Mexico.

The weekly US oil inventory report will be released June 2 due to the Memorial Day holiday May 30.

Energy prices
The July contract for benchmark US light, sweet crudes traded at $99.60-103.39/bbl May 31 on NYMEX, before closing at $102.70/bbl, up $2.11 for the day. The August contract also increased by $2.11 to $103.27/bbl. On the US spot market, WTI at Cushing also was up $2.11, matching the front-month futures price of $102.70/bbl.

Heating oil for June delivery climbed 6.58¢ to $3.06/gal on NYMEX. RBOB for the same month increased 5.84¢ to $3.15/gal.

The July natural gas contract rose 14.8¢ to $4.67/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated 21.1¢ to $4.63/MMbtu.

In London, the July IPE contract for North Sea Brent crude advanced $2.05 to $116.73/bbl. Gas oil for June jumped $19.25 to $962/tonne.

The average price for OPEC’s basket of 12 reference crudes was up $1.61 to $111.20/bbl. OPEC’s Vienna office will be closed June 2.

Contact Sam Fletcher at

Related Articles

MARKET WATCH: Oil futures plunge below $50/bbl


Light, sweet crude oil futures prices plunged lower to settle below $50/bbl on the New York market on July 22.

Cornyn calls for more US energy exports in wake of Iran deal

07/23/2015 US Senate Majority Whip John Cornyn (R-Tex.) said it would be geopolitically, economically, and strategically absurd for the US to maintain outmode...

Post-sanctions Iran initially won’t shake markets up, executive says

07/22/2015 Iran’s resumption of oil and gas exports, once sanctions are lifted under the recently negotiated nuclear limits agreement, probably won’t flood gl...

UAE easing gasoline, diesel price controls


The United Arab Emirates is moving prices of gasoline and diesel toward deregulation effective Aug. 1.

MARKET WATCH: NYMEX crude oil prices gain on expected weekly supply decline

07/22/2015 Light, sweet crude oil prices settled modestly above $50/bbl on the New York market on July 21, gaining support from a stronger dollar and from exp...

BLM extends comment period for Colorado oil, gas project’s EA

07/21/2015 The US Bureau of Land Management has extended the comment period for a preliminary environmental assessment (EA) of a proposed oil and gas project ...

Study looks at gas transmission, storage sites’ methane releases

07/21/2015 A comprehensive study of US natural gas transmission and storage operations found total methane emissions from 2,292 on-site measurements, addition...

MARKET WATCH: NYMEX crude oil price for August briefly dips below $50/bbl

07/21/2015 Light, sweet crude oil prices briefly dropped below $50/bbl on the New York market on July 20 for the first time since April but regained some supp...

Canadian provincial premiers propose national energy strategy

07/20/2015 Provincial premiers in Canada have proposed a national energy strategy with actions targeting “sustainability and conservation,” “technology and in...
White Papers

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

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
Available Webcasts

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.


Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


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