MARKET WATCH: Energy prices escalate with hopes to ease European crisis

Energy prices escalated Sept. 27 despite no apparent change in market fundamentals, with crude making an amazing jump of 5.3% to recoup most of last week’s losses in the New York market. Natural gas was up 1.2% as it too followed a rally in the broader market on signs of progress in the Euro-zone sovereign debt crisis.

“One would think that Europe's debt crisis, domestic austerity, and global economic malaise are now nonstarters. But what has really changed since last week? Aside from ‘le Tarp’ [the Euro-zone bailout plan] in Europe, the ‘Buffett rule’ [the administration’s proposal to raise taxes on the wealthy] in the States, and an artificial range increase for [China’s] yuan that smacks of currency manipulation, not much; and with short positions at a post-March 2009 high, investors seem to be taking advantage of the calm before the storm,” said analysts in the Houston office of Raymond James & Associates Inc.

They reported the Standard & Poor’s 500 index was higher during early trading Sept. 28 “in anticipation of another round of German-led bailouts.” Crude futures were down 1%, and gas futures were trading flat.

James Zhang at Standard New York Securities Inc., the Standard Bank Group., said, “Gasoline cracks strengthened yesterday from a recent decline, despite a large inventory build in US gasoline reported by the American Petroleum Institute. The term structures for both Brent and West Texas Intermediate remained largely unchanged.”

Zhang reported, “The European Union commission appeared to push on with the idea to bolster the European Financial Stability Fund (EFSF), and the Greek parliament passed a new tax on properties.” Nonetheless, he said, “We view the very strong rally across both the equity and commodity markets as more of a relief rally that is unlikely to be sustained. Although a bigger EFSF fund might buy some more time for Euro-zone policymakers, it is not sufficient to resolve the current crisis. Germany is to vote [Sept. 29] whether to agree to an expansion of the EFSF, which will be a key event for the market.”

Zhang said, “We expect the oil price to remain under pressure from both the ongoing Euro-zone debt crisis and the deteriorating global economy. Volatility is expected to remain elevated. Refining margins and the Brent structure are likely to weaken, while we see the WTI structure firming on further inventory draws at Cushing, Okla.”

In other news, the Buzzard field in the North Sea was reported to have ramped up production to 180,000 b/d, still below its previous production rate of 200,000 b/d.

US inventories

The Energy Information Administration reported Sept. 28 commercial US crude inventories increased 1.9 million bbl to 341 million bbl in the week ended Sept. 23, just above average for this time of year but short of Wall Street’s consensus for a 2.1 million bbl gain. Gasoline stocks were up 800,000 bbl to 214.9 million bbl, also above average but short of market expectations of a 1 million bbl increase. Finished gasoline inventories remained unchanged while blending components inventories increased last week. Distillate fuel inventories rose 100,000 bbl to 157.7 million bbl, contrary to analysts’ consensus for a 400,000 bbl decrease.

Imports of crude into the US increased by 1.4 million b/d to 9.7 million b/d last week. In the 4 weeks through Sept. 23 crude imports averaged 8.8 million b/d, down 277,000 b/d from the comparable period a year ago. Gasoline imports last week averaged 541,000 b/d while distillate fuel imports averaged 150,000 b/d.

The input of crude into US refineries was down 130,000 b/d to 15.2 million b/d last week with units operating at 87.8% of capacity. Gasoline production increased to 9.3 million b/d while distillate fuel production increased to 4.6 million b/d.

Energy prices

The November contract for benchmark US light, sweet crudes jumped $4.21 to $84.45/bbl Sept. 27 on the New York Mercantile Exchange. The December contract escalated $4.20 to $84.68/bbl. On the US spot market, WTI at Cushing remained in step with the front-month crude futures price, up $4.21 to $84.45/bbl.

Heating oil for October delivery climbed 8.51¢ to $2.88/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month continued its advance with a remarkable 1-day gain of 12.61¢/gal.

The October contract for natural gas continued to rally, up 4.5¢ to $3.83/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rose 11¢ to $3.92/MMbtu.

In London, the November IPE contract for North Sea Brent gained $3.20 to $107.14/bbl. Gas oil for October increased $16.25 to $906.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes regained $2.72 to $104.53/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

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...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...
Available Webcasts


Prevention, Detection and Mitigation of pipeline leaks in the modern world

When 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



On Demand

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


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

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