MARKET WATCH: Crude oil prices fall as markets again turn pessimistic

Crude oil prices again fell Oct. 19, along with hopes for resolution of the European economic crisis as demonstrators turned violent outside the Greek parliament in Athens during a general strike in protest of the government’s austerity program.

“France and Germany are still at odds over how to put out the ‘Greece fire,’ which is turning violent and quickly getting out of control. Hopefully a resolution comes pretty quickly as Greece estimates they will have ‘burned’ through their cash by mid-November,” said analysts in the Houston office of Raymond James & Associates Inc. The Greek strike and riots continued Oct. 20.

Markets are in a pattern of almost daily reversals based on news from Europe and other trouble spots.

Today, National Transitional Council officials reported Libyan dictator Moammar Gadhafi was killed in battle as revolutionary forces took Sirte, his hometown and one of the last pockets of resistance by regime loyalists. Details of his death were not immediately available.

While Gadhafi’s demise could negate a prolonged insurgency by loyalists similar to that in Iraq, analysts at Barclays Capital Research said his death “changes very little in the underlying dynamics” of Libya’s oil industry.

“Serious security challenges persist in Libya that could hinder efforts to restore Libyan production fully,” they said. “Divisions within the rebel ranks are undermining efforts to craft a coherent interim government.” As a result, they said, “There is no parliament, no constitution, and virtually no civil society organizations, and the Libyan military is riddled with tribal and regional divisions. Hence, the potential for a security and political vacuum in Libya continues to be elevated, in our view.”

Libya’s eastern and the western oil fields are ramping up their reduced output, producing 400,000 b/d primarily for domestic consumption. About 130,000 b/d of refining capacity is on stream and is expected to increase to 230,000 when the Zawiyah refinery reaches full output. “It could rise to 300,000 b/d by yearend if the Ras Lanuf plant restarts following repairs,” Barclays Capital reported.

Continued European unrest and the latest “Beige Book”—the US Federal Reserve Bank’s periodic commentary on economic conditions—that suggests a more modest pace of economic growth were primarily responsible for yesterday’s weak market, Raymond James analysts said. The Standard & Poor’s 500 Index reacted “by falling 1.3%, with crude doubling those losses, ending down 2.5%. This in turn sent the Oil Service Index (OSX) and SIG Oil Exploration & Production Index (EPX) down 2.5% and 0.6%, respectively. After 2 days of losses, natural gas rose 1% yesterday, likely buoyed by short covering” they said. Yet commodities and markets were up in early trading Oct. 20 on speculation the European Union may yet reach an agreement to boost bailout funds for Greece.

Olivier Jakob at Petromatrix in Zug, Switzerland, said, “West Texas Intermediate has been mainly following the global trend set by the S&P 500 and has therefore also produced a series of daily reversals right in front of $90/bbl. It is also back within its weekly descending channel.” The latest report on US inventories “was on the supportive side, but in front of the EU weekend it will remain difficult to trade WTI outside of a high frequency trade to the S&P.”

Jakob reported, “Four days before the EU summit there is still no agreement and having such give-and-take negotiations so late in the process means that by definition only an imperfect solution will be presented. Between the constitution of Germany, the AAA [credit rating] of France, and the recapitalization of the banks, there will likely be a weak link in whatever the EU proposes.”

However, he said, “The EU is not short of ideas to control the ‘evil’ speculators. After a ban on shorting sovereign credit default swaps, it is now considering prohibiting the rating agencies from issuing revisions to their ratings at an ‘inopportune moment.’ That is indeed a novel way of preserving a triple-A rating.”

In the European market, Jakob said, “The backwardation in RBOB gasoline continues to fall from the cliff, taking the RBOB crack to Brent down with it.” He observed, “If backwardation in ICE gas oil futures has softened since the end of last week, the European distillates premiums remain very strong. However…the distillates stock deficit compared to previous years is more in the Southern or Nordic European countries than in the gas oil hub countries. The latest consumer stock levels for Germany for end-September continue to show them in the normal range.”

US inventories

The Energy Information Administration reported the injection of 103 bcf of natural gas into US underground storage in the week ended Oct. 14, below the consensus estimate of 110 bcf. This raised working gas in storage above 3.6 tcf. That’s 46 bcf below the level this time last year but 113 bcf above the 5-year average.

EIA earlier said commercial US crude inventories fell 4.7 million bbl to 332.9 million bbl in the week ended Oct. 14, opposite the Wall Street consensus for a 2 million bbl increase (OGJ Online, Oct. 19, 2011). Gasoline stocks dropped 3.3 million bbl to 206.3 million bbl in the same period, exceeding analysts’ expectations of a 1.5 million bbl decline. Finished gasoline inventories increased while blending components inventories decreased. Distillate fuel inventories were down 4.3 million bbl to 149.7, also exceeding expectations for a 1.5 million bbl draw.

Energy prices

The November contract for benchmark US sweet, light crudes fell $2.23 to $86.11/bbl Oct. 19 on the New York Mercantile Exchange. That contract will expire at the close of the regular trading session today. The December contract dropped $2.24 to $86.29/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., followed the front-month crude futures contract, down $2.23 to $86.11/bbl.

Heating oil for November delivery declined 4.65¢ to $2.98/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month lost 7.54¢ to $2.67/gal.

The November natural gas contract regained 3.3¢ to $3.59/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., continued to decline, down 1.5¢ to $3.60/MMbtu.

In London, the December IPE contract for North Sea Brent lost $2.76 to $108.39/bbl. Gas oil for November rose $11.75 to $948.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 71¢ to $108.65/bbl.

Contact Sam Fletcher at

Related Articles

Inhofe, Lankford say new BIA rules threaten Osage oil operations

07/10/2015 New US Bureau of Indian Affairs regulations that increase production expenses on tribal lands could put the Osage Nation out of business, Oklahoma’...

House panel’s crude export ban hearing weighs urgency against caution

07/10/2015 A US House Energy and Commerce subcommittee hearing on legislation to repeal the ban on exporting US-produced crude oil quickly broke along party l...

Chevron Phillips Chemical makes executive appointments


Chevron Phillips Chemical Co. LLC has made several executive appointments, all effective Aug. 1.

Twelve workers killed in Nigeria pipeline explosion

07/10/2015 Eni SPA reported that an explosion occurred July 9 at the repair site for the Tebidaba-Clough Creek oil pipeline in Nigeria’s onshore Niger Delta.

Gov. Tomblin forms West Virginia oil, gas safety commission

07/10/2015 West Virginia Gov. Earl Ray Tomblin (D) established the oil and gas safety commission he announced in his 2015 State of the State address. The grou...

MARKET WATCH: NYMEX, Brent crude oil prices rebound more than $1/bbl

07/10/2015 Prices for US light, sweet crude oil and Brent crude each rebounded by more than $1/bbl on their respective markets July 9, and analysts attributed...

Transco seeks FERC approval for New York Bay Expansion project

07/09/2015 Transcontinental Gas Pipe Line Co. LLC (Transco), a wholly owned subsidiary of Williams Partners LP, has filed an application with the US Federal E...

House Oversight panel subpoenas Kerry for Keystone XL documents

07/09/2015 The US House Oversight and Government Reform Committee issued a subpoena to US Sec. of State John F. Kerry for reports, recommendations, letters, a...

MARKET WATCH: NYMEX crude oil prices drop for fifth consecutive trading session

07/09/2015 US light, sweet crude oil prices settled slightly lower on the New York market July 8 for the fifth consecutive trading session, and analysts attri...
White Papers

Definitive Guide to Cybersecurity for the Oil & Gas Industry

In the Oil and Gas industry, there is no single adversary and no single threat to the information tech...

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

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
Available Webcasts

Better Data, Better Analytics, Better Decisions

When Tue, Oct 27, 2015

The Oil & Gas industry has large amounts of data stored in multiple systems which are purpose built for certain tasks. However, good decisions require insights based upon the data in all of these systems. These systems in turn do not talk to each other. So the process of analyzing data, gaining insights, and making decisions is a slow one and often a flawed one. Good decisions require accurate analytics and accurate analytics require superior/sustainable data quality and governance. This webinar focuses on:

  • The importance of data quality and governance
  • How technological advances are making data quality and governance sustainable in order to get the accurate analytics to make solid decisions.

Please join us for this webcast sponsored by Seven Lakes Technologies and Noah Consulting.


Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


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