MARKET WATCH: Crude oil prices dip slightly; natural gas price increases

Crude prices dipped marginally Aug. 31 in the New York market on a bearish inventories report, ending a 2-day rally earlier this week. However, natural gas advanced 3.7% on potential supply impacts from Tropical Storm Katia brewing near the Dominican Republic.

Katia is expected to develop into a strong Category 3 hurricane. But the latest metrological models show the storm taking a northern track next week and posing no threat to oil and gas operations in the Gulf of Mexico or to the US East Coast. However, analysts continue monitoring the storm ahead of the long US Labor Day weekend.

Meanwhile, BP PLC and Anadarko Petroleum Corp. began evacuation of nonessential workers from the gulf because another tropical disturbance that could become tropical storm Lee ahead of the holiday. Other major operators in the gulf are keeping an eye on the weather. In Mexico, Petroleos Mexicanos (Pemex) said it is monitoring storm conditions but has taken no precautionary steps yet. The US National Hurricane Center said the disturbance has a 30% chance of becoming Tropical Storm Lee within 48 hr.

In Houston, analysts at Raymond James & Associates Inc. reported the broader equity market rallied at the end of August as the Dow Jones Industrial Average “officially turned positive for the year.”

James Zhang at Standard New York Securities Inc., the Standard Bank Group, observed, “Oil’s rally appeared to run out of steam yesterday, despite further gains seen in many major equity markets.” He said European gasoline also was lifted by the weekly US inventory report, but middle distillates weakened vs. crude.

“Meanwhile, the term structures for Brent and West Texas Intermediate strengthened as their December 2011-December 2012 spreads gained 63¢/bbl and 97¢/bbl respectively,” said Zhang.

US inventories

The Energy Information Administration reported the injection of 55 bcf of natural gas into US underground storage in the week ended Aug. 26, below the Wall Street consensus of 60 bcf. That raised working gas in storage above 2.96 tcf; that’s 137 bcf less than a year ago and 69 bcf below the 5-year average.

EIA earlier said 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. Distillate fuel inventories increased 400,000 bbl to 156.1 million bbl, slightly below market expectations of a 500,000 bbl gain (OGJ Online, Aug. 31, 2011).

The weekly EIA inventory report showed total US stocks increasing some 4 million bbl for the third consecutive week. “Since the start of the third quarter, the US has built 26.7 million bbl of commercial stocks, of which about 25 million bbl were a transfer from the strategic reserve to the commercial stocks,” said Olivier Jakob at Petromatrix in Zug, Switzerland. “Excluding the Strategic Petroleum Reserve release, the US total petroleum stocks are flat so far in this quarter. Total US stocks are 51 million bbl below the historically extreme high stocks of 2010, slightly below (by 9 million bbl) the levels of 2009 and way above (by 102 million bbl) the levels of 2008. Stocks of crude and clean petroleum products were higher by 3.3 million bbl during the week.”

Jakob noted, “We are starting to exit the US summer demand season [effective the Sept. 5 Labor Day holiday] and as the specification moves to winter mode, production of gasoline will be easier. It will take a hurricane wiping out refinery assets to really tighten the US gasoline stock cushion. The gasoline stocks on the US East Coast are considerably lower than a year ago but at par to the levels of 2009.” Refinery runs on the East Coast are increasing, and with additional refining capacity now available in that area, he said, “We view the supply cushion as not worse than a year ago.”

He said, “Distillate stocks are still below the levels of 2009-2010, but the stock build since early June has been about at par to previous years.” Commercial crude stocks on the US Gulf Coast continue to build through the transfer of SPR barrels.

“Physically, all of the 30 million bbl of SPR crude oil has now been lifted, but 6 million bbl still have to show up in the next two Department of  Energy reports,” Jakob said. “Crude oil stocks on the Gulf Coast are basically at par to the levels of a year ago and ample enough to allow the seasonal stock draw in the fourth quarter for tax reasons. After that, the picture in the first quarter of 2012 will pretty much depend on the rate of Libyan crude oil production coming back on stream.”

Energy prices

The October contract for benchmark US sweet, light crudes slipped 9¢ to $88.81/bbl Aug. 31 on the New York Mercantile Exchange. The November contract dipped 3¢ to $89.16/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 9¢ to $88.81/bbl in step with the front-month futures price.

Heating oil for September delivery inched up 0.9¢ to $3.08/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month increased 3.62¢ to $3.03/gal.

The new front-month October contract for natural gas escalated 14.5¢ to $4.05/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 11.7¢ to $4.03/MMbtu.

In London, the October IPE contract for North Sea Brent advanced 83¢ to $114.85/bbl. Gas oil for September was unchanged at $973.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes climbed to $111.40/bbl on Aug. 31 from $109.48/bbl Aug. 30 when the group’s Vienna office was closed both days.

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

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

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
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

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

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


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