MARKET WATCH: Energy prices continue intermittent downward spiral

Energy prices generally continued their intermittent downward spiral as the dollar strengthened against the euro, with front-month crude dropping 2% Sept. 16 to wipe out its small gain in the previous session of the New York market.

“Natural gas posted a 1% loss building on the momentum of the bearish Energy Information Administration inventory report [issued Sept. 18] and forecasts for milder temperatures,” said analysts in the Houston office of Raymond James & Associates Inc. The SIG Oil Exploration & Production Index ended flat for the day while the Oil Service Index posted a 1% loss “as the drop in crude pressured the respective indices,” they said. Broader markets and crude prices were down in early trading Sept. 19 with natural gas “marginally lower.”

James Zhang at Standard New York Securities Inc., the Standard Bank Group, said oil prices edged lower as US consumer confidence remained weak. “Oil products fared slightly better than crude, which saw refining margins improve by around $1/bbl in Europe. Brent’s term structure ended the day broadly unchanged after some intraday rallies,” he reported.

Raymond James analysts noted, “Last week investors were listening to the leaders in the Euro-zone buoyed by hopes that a resolution to the debt crisis would emerge.”

US Treasury Secretary Timothy Geithner attended the Sept. 16 meeting of European finance ministers “to tell Europe how they should do it, and he received a cold shoulder (we are being very diplomatic),” said Olivier Jakob at Petromatrix in Zug, Switzerland. He added, “The Greek Prime Minister was supposed to travel to the US this weekend, [but the] trip was cancelled at the last minute at the London stop-over and [made] a U-turn back to Greece. Separately, the latest opinion polls show 66% of the Germans and 68% of the French are against providing a new bail-out to Greece.”

Jakob warned, “The political cacophony in Germany about Greece is not slowing down, and it its quite clear that we should not write-off the risk premium for Greece just because a video conference is organized between German Chancellor Angela Merkel and French President Nicolas Sarkozy.” On Sept. 16, Moody's Investors Service confirmed it could still downgrade Italy’s credit rating within the next month.

Meanwhile, Jakob said, “Merkel suffered a setback at local polls over the weekend, and it seems that Germany is getting tougher on what it asks of Greece: having a plan for more tax collection in the future does not fly anymore as there is little trust that such measures will be truly implemented; the Greek budget needs to be balanced through higher cuts in spending.”

He said, “This week will be all about the US Federal Reserve’s open market committee [the Fed’s policy-making arm] meeting and the decision they take or don’t take. The consensus is for an ‘Operation Twist,’ although how it would really have an impact on global assets is very unclear to us as it would not be the same liquidity operation that QE2 [the second phase of the Fed’s quantitative easing program] was.”

Named for the popular Twist dance in 1961 when that plan originated, it is intended to flatten the yield curve, promote capital flow, and strengthen the dollar by using open market operations to shorten the maturity of the public debt. It generally was considered a failure at that time but has since been resurrected.

“One way or another, the US Federal Reserve should be the creator of substantial volatility in the second part of the week,” Jakob cautioned. Meanwhile, President Barack Obama’s plan to raise taxes on capital gains “could be stock market negative.” However, Jakob said getting through the Republican-controlled House “anything that originates in the White House a year before the next elections” is unlikely.

Energy prices

The October contract for benchmark US light, sweet crudes dropped $1.44 to $87.96/bbl Sept. 16 on the New York Mercantile Exchange, obliterating its 49¢/bbl gain from the previous session. The November contract lost $1.41 to $88.18/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.44 to $87.96/bbl.

Heating oil for October delivery declined 1.57¢ to $3.01/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month continued inching up with a 0.13¢ increase, yet closed essentially unchanged at a rounded $2.78/gal.

The October contract for natural gas kept falling, down 6.9¢ to $3.81/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 17.4¢ to $3.82/MMbtu.

In London, the November IPE contract for North Sea Brent dipped 8¢ to $112.22/bbl. Gas oil for October was down $1.75 to $950.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes escalated by $1.11 to $110.69/bbl. So far this year, the OPEC basket price has averaged $107.43/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

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...

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 ...

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