MARKET WATCH: Energy prices retreat among European economic worries

Energy prices generally fell Aug. 16 as markets failed to carry over gains from the previous session.

“Instead, domestic markets suffered renewed anxiety over the Old World as the European Union released lower-than-expected gross domestic product figures,” said analysts in the Houston office of Raymond James & Associates Inc. “In a joint speech, France's President Nicolas Sarkozy and Germany's Chancellor Angela Merkel proposed a eurozone solution [for] the region's debt problems, but the speech failed to calm market fears.” The Standard & Poor’s 500 index “erased nearly 1% from [Aug. 16] gains due to Europe's woes and weak retail sales data. Oil and natural gas followed the broader market sentiment of a global economic slowdown, falling 1% and 2%, respectively.

Broader market futures and crude were up modestly in early trading Aug. 17, while natural gas continued to decline.

Olivier Jakob at Petromatrix in Zug, Switzerland, said, “The EU-2 [Germany and France] had their meeting yesterday, and the other 15 EU countries must have been impatient to hear what was apparently decided for them. Anyway, the ‘emergency’ meeting did not come up with any emergency measures, the EU-2 leaders expressed their strong defense of the euro but could not agree to the concept of euro bonds [or] increased funding for the Emergency European Fund.”

He said, “What we got instead is a project to have all European nations write the debt golden rule in their constitution (good luck with that) and a project to force Ireland to increase its corporate taxes (through European harmonization). In our opinion, the markets will get tired of those European meetings that come up with not much than another round of spin.”

Meanwhile, Jakob said, “The real European economy shows a GDP growth of 0.2% in the second quarter vs. the first quarter. Last year in for the same period, Europe had a GDP growth of 1%. Germany is now at 0.1% vs. 2.1% a year ago. The UK is [up] 0.2% vs. 1.1% last year, and France is flat vs. 0.5% [gain a year ago].”

He noted, “The US July Industrial Production [up] 0.9% in July was better than expected on the back of strong automobile production (now they only have to sell those cars while consumer sentiment is falling), but the housing starts continue to show no improvement.”

Other Standard Bank analysts observed, “The monetary base in the US continues to grow,” with the St. Louis Federal Reserve Bank money supply increased by 1.3% since the start of August. The money supply has increased 7% so far this year and is up 18% since October 2008 (just after the Lehman’s collapse).

They said, “Clearly, despite no further quantitative easing by the Fed, liquidity as defined by zero maturity money (or money immediately available for spending) continues to grow.” The St Louis Fed money supply numbers are often used as a proxy for money supply in the broader US economy.

Standard Bank analysts reported, “Product cracks and refining margins weakened further yesterday.” Oil continued to track closely the broad market, such as the S&P 500 index, closely.

US inventories

The Energy Information Administration said Aug. 17 commercial US crude inventories climbed by 4.2 million bbl to 354 million bbl in the week ended Aug. 12, with recent transfer of oil from the US Strategic Petroleum Reserve to commercial storage on the Gulf Coast. Those stocks are still above average for this time of year, with the latest input out of line with the Wall Street consensus for a draw of 500,000/bbl. Gasoline stocks dropped 3.5 million bbl to 210.1 million bbl in the same period, well beyond Wall Street’s expectation of a 1.2 million bbl decrease. Both finished gasoline and blending components fell, said EIA officials. Distillate fuel inventories increased 2.4 million bbl to 154 million bbl, while analysts expected a smaller gain of 600,000 bbl.

The American Petroleum Institute earlier reported an increase of 1.7 million bbl to 350.4 million bbl of crude stocks. Based on a different calculation method, the API said gasoline fell 5.4 million bbl to 205.8 million bbl while distillate dropped 1.3 million bbl to 145.6 million bbl.

EIA reported the import of crude into the US increased last week by 185,000 b/d to 9.3 million b/d. That’s the same amount US crude imports averaged in the 4 weeks ended Aug.12, down by 606,000 b/d from the comparable period in 2010. Gasoline imports last week averaged 677,000 b/d, while distillate fuel imports averaged 97,000 b/d.

The input of crude into US refineries fell 205,000 b/d to 15.4 million b/d with units operating at 89.1% of capacity last week. Gasoline production decreased to 9.3 million b/d, while distillate fuel production increased to 4.6 million b/d.

Energy prices

The September contract for benchmark US light, sweet crudes dropped $1.23 to $86.65/bbl Aug. 16 on the New York Mercantile Exchange. The October contract fell $1.29 to $86.85/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.23 to $86.65/bbl.

Heating oil for September delivery dipped 1.15¢ to $2.93/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month declined 2.07¢ to $2.85/gal.

The September contract for natural gas lost 9.2¢ to $3.93/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., decreased 4.4¢ to $3.99/MMbtu.

In London, the September IPE contract for North Sea Brent retreated 44¢ to $109.47/bbl. Gas oil for September gained $4.75, however, to $927.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 64¢ to $105.42/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


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


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

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