MARKET WATCH: Energy prices apparently weathering financial woes in Europe

Crude oil prices generally continued to creep higher in mixed trading in the New York market Nov. 2, and equity markets improved despite the financial turmoil that is roiling Europe.

Despite pressure from his own and opposition parties, Greek Prime Minister George Papandreou refused to resign during an emergency cabinet meeting Nov. 3 and reportedly has scrapped his plan for a referendum on the government’s unpopular austerity program. He now faces a conference vote in his government.

Papandreou’s surprise call for a public referendum earlier this week angered creditors and government leaders of the 16 other countries in the Euro-zone and jeopardized the financial bailout package for Greece that was hammered out last week by the European Union. In the aftermath, the Italian government is in trouble because it hasn’t produced a plan to deal with a mountain of sovereign debt, and Portugal wants more flexible terms for its bailout.

Olivier Jakob at Petromatrix in Zug, Switzerland, said, “The December period is always a concern for cash liquidity issues. Yesterday, the European Financial Stability Facility pulled the plug on a planned €3 billion 10-year bond sale due to ‘market conditions.’ We’ll keep an eye on the Italian 10-year bond yields.”

In the interim, Jakob reported, “Germany showed the first increase in unemployment since February 2010, its Purchasing Managers' Index fell below 50 (49.1) and the European PMI (as reported by data provider Makrit) shrank for the third month in a row deeper into contraction levels(with new orders falling at the fastest pace since May 2009). Meanwhile the latest oil demand data for Spain shows gasoline demand in September down 6.9% vs. last year and diesel down 3.9%.”

The European Central Bank unexpectedly announced Nov. 3 it will cut interest rates to 1.25% in an attempt to stimulate the continent’s economy.

“It is more than a little ironic that a popular referendum in the ‘cradle of democracy’ could bring down the entire Euro-zone experiment, but rest assured, Brussels will try its hardest to make sure democracy doesn't get in its way,” said analysts in the Houston office of Raymond James & Associates Inc. “Despite Europe's mounting tensions, the markets bounced yesterday, with the Standard & Poor’s 500 Index up a solid 1.6%.

They said, “While the OSX [Oil Service Index] paralleled the broader market, the EPX [SIG Oil Exploration & Production Index] jumped 5.7% on strong earnings from major E&P companies. Crude gave up early gains on a larger than expected build in inventories, while gas was down 1%. All eyes today are on Cannes, where the G-20 leaders are…deciding the fate of the global economy.”

In other news, Jakob said, “While the focus is currently on the [Group of 20 meeting in Cannes Nov. 3-4], we want to keep in mind that the International Atomic Energy Agency (IAEA) board of governors meeting is on Nov. 17, and there are strong indications that an IAEA report will already be circulating next week highlighting the military aspect of the Iranian nuclear program. We are already starting to see more stories being printed about the possibilities of military strikes on Iran (yesterday Israel performed a test launch of a ballistic long-range missile). While we consider this to be part of the normal pressure-building to push China and Russia into taking a stronger stance against Iran, we nonetheless have to consider that Iran, nukes, and military strikes should become an increasing part of the trading universe in the coming weeks. And we know how markets will like that especially as we head towards the end of the year.”

James Zhang at Standard New York Securities Inc., the Standard Bank Group, said, “The market needs to navigate through a flood of macroeconomic data and central bank policy announcements this week, with focuses on PMI and ISM [Institute for Supply Management] indices for the US and Europe, Federal Open Market Committee [the policy-making arm of the Federal Reserve Bank], and ECB policy meetings and the US non-farm payrolls.”

Among other factors that may impact equity and commodity markets, the government-controlled Freddie Mac lost $6 billion, or $1.86/share, in the third quarter, up from a $4.1 billion loss in the same quarter. It has asked for $6 billion to make up that loss, the largest bite on taxpayers since April 2010.

The US Department of Labor reported new applications for unemployment benefits dropped 9,000 to a seasonally adjusted 397,000, the lowest level in 5 weeks. It's the third time initial applications have fallen below 400,000 since April, yet unemployment remains above 9%.

US inventories

The Energy Information Administration reported the injection of 78 bcf of natural gas into US underground storage in the week ended Oct. 28, up from the Wall Street consensus for a 70 bcf input. That raised the amount of working gas in storage to nearly 3.8 tcf. Stocks now are 17 bcf less than in the comparable period last year and 201 bcf above the 5-year average.

EIA earlier reported commercial US crude inventories increased 1.8 million bbl to 339.5 million bbl last week. Gasoline stocks were up 1.4 million bbl to 206.3 million bbl in the same period. Inventories of both finished gasoline and blending components increased. However, distillate fuel inventories fell 3.6 million bbl to 141.9 million bbl (OGJ Online, Nov. 2, 2011).

Energy prices

The December contract for benchmark US sweet, light crudes increased 32¢ to $92.51/bbl Nov. 2 on the New York Mercantile Exchange. The January contract advanced 30¢ to $92.35/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 32¢ to $92.51/bbl.

Heating oil for December delivery declined 3.72¢ to $3/gal on NYMEX. However, reformulated blend stock for oxygenate blending for the same month inched up 0.28¢ to $2.63/gal.

The December natural gas contract decreased 3.2¢ to $3.75/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 7.5¢ to $3.43/MMbtu.

In London, the December IPE contract for North Sea Brent lost 20¢ to $109.34/bbl. The price of gas oil for November continued to seesaw, up $22.25 to $961.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes jumped by $2.30 to $108.65/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

TransCanada challenges EPA’s comments on Keystone XL SEIS

02/11/2015 TransCanada Corp. responded to the Feb. 2 comment letter from the US Environmental Protection Agency on the US Department of State’s final suppleme...

PNR cuts capital spending nearly in half

02/11/2015 Pioneer Natural Resources Co. (PNR), Dallas, plans to spend $1.85 billion in 2015 following a fourth quarter in which the company reported a net in...

InterOil wins arbitration over rights dispute with Oil Search

02/11/2015 The International Chamber of Commerce arbitration panel in London has found in favor of InterOil Corp. in its battle with Oil Search Ltd. over pree...

PACE survey finds 69% support for crude exports to trading partners

02/11/2015 More than two thirds of registered voters responding in a nationwide telephone survey commissioned by Producers for American Crude Exports (PACE) s...

New study finds wide variations in gathering systems’ methane samples

02/11/2015 Samples of methane emissions from 114 natural gas gathering stations and 16 processing plants across 13 states found wide variations in amounts act...

EIA: US gasoline prices to average $1/gal less in 2015 vs. 2014

02/10/2015 US regular gasoline retail prices are expected to average $2.33/gal in 2015, down from $3.36/gal in 2014, according to the Energy Information Admin...

MARKET WATCH: NYMEX oil prices rise on revised OPEC forecast

02/10/2015 Crude oil prices climbed more than $1/bbl on Feb. 9 to settle above $52/bbl, marking a third consecutive trading session that ended with higher pri...

MEO, Eni to exchange sections of Timor Sea permit

02/10/2015 MEO Australia Ltd., Melbourne, and Eni SPA—MEO’s joint-venture partner in the NT/P68 permit in the Timor Sea—have decided to split the permit betwe...

MRPL increases ownership in aromatics complex

02/10/2015 Mangalore Refinery & Petrochemicals Ltd. (MRPL), a subsidiary of Oil & Natural Gas Corp. Ltd. (ONGC), has increased its ownership interest ...
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