MARKET WATCH: Energy prices climb; DOE says SPR oil 'oversubscribed'

Sam Fletcher
OGJ Senior Writer

HOUSTON, July 1 -- Energy prices continued climbing June 30 albeit at slower rates with the front-month contract for benchmark US crudes up 1% in New York as spending cuts endorsed by Greek officials boosted the euro against the dollar.

Natural gas also increased 1.5% “after a neutral-to-bullish storage number provided a moderate rally,” said analysts in the Houston office of Raymond James & Associates Inc.

The Energy Information Administration reported the injection of 78 bcf of natural gas into US underground storage during the week ended June 24, below Wall Street’s consensus for an input of 81 bcf. It increased working gas in storage to 2.4 tcf, down 243 bcf from the storage level in the comparable week last year and 63 bcf below the 5-year average (OGJ Online, June 30, 2011).

“Gaining steam from the commodities, energy stocks outperformed the broader markets (up by 1%), with the Oil Service Index was up 2% and the [SIG Oil Exploration & Production Index] EPX was up 1%,” they said. Both oil and gas prices were down in early trading July 1.

“Yesterday was the end of the quarter and the Standard & Poor’s 500 index had a magnificent rally so far this week, rebounding on the 200-day moving average and going yesterday through the 50-day and 100-day moving average. For the year, the S&P is up 5% while the S&P GSCI [Goldman Sachs Commodity Index] is up 2.71%,” said Olivier Jakob at Petromatrix, Zug, Switzerland.

US equities received some support from a better-than-expected Chicago Purchasing Managers Index (PMI). “Overnight, however, the official Chinese PMI was published at 50.2, the lowest level in 28 months,” said Jakob. “The number is not a full surprise as the advanced look at the PMI had already indicated the possibility of the PMI to be just a fraction above contraction.”

The European Consumer Price Index was confirmed at 2.7%, increasing expectations of an interest rate hike by the European Central Bank on July 7. This is providing support to the euro, but the Swiss franc is starting to be sold as Greece has “decided to postpone its collapse to a later date,” said Jakob.

SPR release ‘oversubscribed’
Meanwhile, the Department of Energy described interest in the tender of crude from the US strategic reserve as “very high and oversubscribed,” he said. “We can therefore expect that all of the 30.2 million sweet bbl offered will be taken, and the question now is where do we find the spare storage tank capacity to hold all those barrels?”

Jakob said, “We count five large international oil-trading companies taking floating storage options in tankers (a mix of very large crude carriers and Suezmaxes). Some oil might have to stay on the water while some room is made in the onshore tanks.”

He noted, “A few investment banks had been expressing doubt that there will be any takers for the SPR barrels, but the DOE’s comments of yesterday indicate this was wishful thinking while those institutions rant about market manipulation. We now work with the assumption that the full 30.2 million SPR bbl will be taken, and we therefore continue to expect that Light Louisiana Sweet crude will be under pressure from the SPR release, and we continue to view Brent as overbought vs. West Texas Intermediate.”

Energy prices
The August contract for benchmark US light, sweet crudes gained 65¢ to $95.42/bbl July 30 on the New York Mercantile Exchange. The September contract increased 64¢ to $95.96/bbl. On the US spot market, WTI at Cushing, Okla., was up 65¢ to $95.42/bbl.

Heating oil for July delivery increased 1.25¢ to $2.93/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month advanced 2.19¢ to $3.03/gal.

The August natural gas contract moved up 5.9¢ to $4.37/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., dropped 9.7¢ to $4.28/MMbtu.

In London, the August IPE contract for North Sea Brent crude increased 8¢ to $112.48/bbl. Gas oil for July gained $3.25 to $926.50/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes advanced $1.31 to $107.50/bbl.

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