MARKET WATCH: Energy prices continue to rally

Energy prices generally continued to rally Aug. 30 on investors’ increased appetite for risk, despite the American Petroleum Institute’s early report of a hefty increase in US crude inventories.

Gasoline prices moved sharply higher on the API’s report of a large draw on US gasoline stocks while heating oil prices “broadly tracked crude moves,” said James Zhang at Standard New York Securities Inc., the Standard Bank Group. “By comparison, European product cracks weakened across the barrel, which dragged the overall refining margins lower by about 50¢/bbl. Term structures for Brent and West Texas Intermediate both strengthened on fairly tight supply and shifts in hedging activities,” he said.

“In the Eurozone, both the Economic Sentiment Index and Consumer Confidence for August fell, which added to a list of signs that the Eurozone economy is losing steam,” Zhang said.

Meanwhile, US consumer confidence dropped to the lowest level since April 2009, according to the Conference Board. However, the US equity market received a boost from the released minutes of the most recent meeting of the Federal Open Market Committee (the policy-making arm of the Federal Reserve Bank) indicating a third round of “quantitative easing” (QE3) to stimulate the national economy was debated during the group’s Aug. 9 meeting.

Those minutes also showed Fed officials “were surprised by the recent slowdown in economic growth,” said analysts in the Houston office of Raymond James & Associates Inc. “Some members noted that the unemployment rate stagnated and expressed equal concern over regulatory uncertainty, fiscal policy, and consumer sentiment,” they said.

“The broader market was more optimistic as it anticipated another round of monetary easing (possibly at the next Federal Reserve meeting in mid-September) and looked forward to President Barack Obama's job plan [to be announced] next week,” they said.

Also on Aug. 30, the Energy Information Administration under the Department of Energy released its natural gas supply data for June, “which showed Lower 48 [gas production] volumes flattish (up just 80 MMcfd) sequentially, while May volumes were revised up 170 MMcfd,” Raymond James analysts reported. They noted, “EIA has put out upward revisions each of the past 8 months (averaging an increase of 15 MMcfd for each revision). Translation: We would not be surprised if June ends up showing more growth when the numbers are revised next month. We also note the [natural gas production in the] Gulf of Mexico continues to bleed, down 4.3% sequentially and down 15% year-over-year (almost 1 bcfd).”

In other news, DOE revised total US monthly demand higher by 273,000 b/d, “which is a change of revision pattern from recent months,” said Olivier Jakob at Petromatrix in Zug, Switzerland. “US gasoline demand for June was revised sharply lower by 260,000 b/d while demand for distillate was revised sharply higher by 310,000 b/d. For June, the US gasoline demand is at the lowest level since 2001, while distillate demand is at the highest level since 2007. Overall US oil demand (excluding LPG) is down 1.8% vs. a year ago and basically at par to the levels of June 2009 and 1.6 million b/d lower than June 2007.”

Looking at the aggregate June numbers for the US, Brazil, and Mexico, Jakob said, “Distillate sales were higher by 169,000 b/d vs. last year; the increase coming basically from the US. For the first 6 months of the year, the aggregate distillate demand is higher by 115,000 b/d, and higher by 514,000 b/d vs. 2009.”

He said, “The positive impact from Brazil in gasoline is due more to the switch from ethanol to gasoline, and this will be reenforced now that Brazil has decided to reduce the anhydrous ethanol content [of its gasoline] from 25% to 20% as of October.”

Jakob also observed, “It is interesting to note the DOE report that the US imported 1 million bbl of crude oil from Libya in June (nothing in April and May). The Libyan crude oil [was] discharged in Hawaii. The tanker Equator had loaded 1 million bbl from the rebel-held area in early April and then had sailed East, refueling in Singapore supposedly for China, but it looks like that it finally made its way to Hawaii.”

US inventories

EIA reported Aug. 31 commercial inventories of US benchmark crude jumped by 5.3 million bbl to 357.1 million bbl in the week ended Aug. 26, burying the Wall Street consensus for a 500,000 bbl withdrawal. Gasoline stocks dropped 2.8 million bbl to 208.6 million bbl in the same period, outstripping analysts’ predictions for a 1 million bbl draw. Finished gasoline inventories increased while blending components stocks decreased. Distillate fuel inventories increased 400,000 bbl to 156.1 million bbl, slightly below market expectations of a 500,000 bbl gain.

Imports of crude into the US escalated by 799,000 b/d to 9.6 million b/d last week, EIA reported. In the 4 weeks through Aug. 26, crude imports averaged 9.2 million b/d, down 441,000 b/d from the comparable period in 2010. Gasoline imports last week averaged 608,000 b/d, while distillate fuel imports averaged 176,000 b/d.

The input of crude into US refineries declined by 219,000 b/d to 15.4 million b/d last week, with units operating at 89.2% of capacity. Gasoline production increased to 9.6 million b/d last week while distillate fuel production increased to 4.7 million b/d.

Energy prices

The October contract for benchmark US light, sweet crudes climbed $1.63 to $88.90/bbl Aug. 30 on the New York Mercantile Exchange. The November contract increased $1.62 to $89.19/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1.63 to $88.90/bbl.

Heating oil for September delivery gained 5.9¢ to $3.07/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month escalated 8.94¢ to $3/gal.

The new front-month October contract for natural gas rose 7.9¢ to $3.91/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., slipped 0.8¢, also closing at $3.91/gal.

In London, the October IPE contract for North Sea Brent was up $2.14 to $114.02/bbl. Gas oil for September gained $10.25 to $973.50/tonne.

The Organization of Petroleum Exporting Countries office in Vienna was closed for a religious holiday and no price update for its basket of 12 benchmark crudes was available.

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


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