MARKET WATCH: Oil prices rise on Iran nuclear work reports

Crude oil and natural gas prices rose Nov. 8, up 1.3% each in the New York market, as Europe’s financial turmoil continued and Iran was reported working to put a nuclear payload on an intermediate-range missile capable of striking Israel.

The International Atomic Energy Agency (IAEA) under the United Nations reported Nov. 7 Iran is working specifically to develop nuclear weapons. Iran of course is the second biggest oil producer among members of the Organization of Petroleum Exporting Countries, behind Saudi Arabia. Its October production was estimated at 3.6 million b/d. “Any conflict in Iran could have serious supply implications for oil markets, and the anxiety this inspires has provided support to world oil prices for the past week,” said Raymond James analysts.

However, initial US reaction to IAEA’s report “has been conservative so far and not even suggesting harsh new sanctions against Iran (probably more sanctions on a few commercial banks),” said Olivier Jakob at Petromatrix in Zug, Switzerland.

“In our opinion the tone was more aggressive after the assassination attempt on the Saudi ambassador. Maybe the US administration has real concerns about Israel going alone after Iran, and therefore does not want to inflate the situation too much. ‘Iranium’ headlines will still need to be watched today. Russia and China are, however, unlikely to rush to allow an IAEA board resolution condemning Iran,” he said.

In Houston, analysts with Raymond James & Associates Inc. said, “Even before the IAEA report was published, Israel had openly contemplated military action against Iran’s nuclear program. Military action from Israel or its allies would likely result in Iran retaliating by trying to close the Strait of Hormuz, a major tanker route for oil exports from Saudi Arabia and Iran.”

They said, “Not surprisingly, this is causing some nervousness in the oil markets with crude rising 5% since Israel began mustering support for a military strike against Iran mid last week.”

Jakob said, “While crude oil futures continue to be supported by the ‘Iranium’ premium, the products are not following and the light-end cracks are suffering further. The naphtha and RBOB [reformulated stock for oxygenate blending] cracks to Brent are going, as we expected, deeper into negative territory, and the pressure is now coming to the European distillates physical premiums. This is something to follow closely given that the refining margins are currently supported only by the distillate and fuel oil crack. ICE gas oil expires tomorrow, and the backwardation is going through the roof, but with a very slow start to winter we have to monitor the weakening trend in the physical premiums.” He also noted heating oil in the New York market “is starting to enter contango territory.”

James Zhang at Standard New York Securities Inc., the Standard Bank Group, said, “Refining margins have dropped sharply since the beginning of this month, by around $4/bbl, as the market is anticipating an increase in refinery run rates at the end of the autumn maintenance season. Meanwhile, the term structures for West Texas Intermediate strengthened further in the wake of a sharp fall in crude inventories at Cushing, Okla. The Brent structure softened somewhat but remained in steep backwardation.

Meanwhile, President Giorgio Napolitano of Italy told uneasy markets that Premier Silvio Berlusconi has promised to resign after the next budget is approved by parliament and that Italy will have either a new government or early elections soon. Napolitano said economic reforms stipulated by other European Union members will be implemented within days. Raymond James analysts reported the New York equity market was up 1.2% Nov. 7 on Napolitano’s reassurances.

Zhang said, “Italy's 10-year government bond yield has exceeded the critical 7%—the level at which Greece, Portugal, and Ireland had to be bailed out. Although the departure of Berlusconi opens the door for a technocrat government, which is more likely to take control of the fiscal situation in Italy, the rapidly rising bond yield and Italy's hefty ongoing funding need is not allowing much time for a transition. The latest development in the Euro-zone appears to have spurred a general ‘risk-off’ sentiment in the market.”

Imports for Germany and France fell in September, “which could be a sign that demand in the two biggest Euro-zone economies might have declined,” said Zhang. Meanwhile, China’s inflation fell from 6.1% year-over-year in September to 5.5% in October.

Zhang said the increase in oil prices also was stimulated by technical buying and a further decline in US oil inventories.

US inventories

The Energy Information Administration said Nov. 9 commercial inventories of US crude dropped 1.4 million bbl to 338.1 million bbl in the week ended Nov. 4. The Wall Street consensus was for a 500,000 bbl increase. Gasoline fell 2.1 million bbl to 204.2 million bbl in the same period, counter to market expectations of a 1 million bbl build. Both finished gasoline and blending components decreased last week. Distillate fuel inventories plummeted 6 million bbl to 135.9 million bbl, far surpassing the market’s outlook for a 2.2 million bbl decline, EIA said.

The American Petroleum Institute earlier reported US crude stocks increased 148,000 bbl to 340 million bbl in the week ended Nov. 4. API said gasoline inventories declined 1.5 million bbl to 207.1 million bbl, while distillate stocks were down 2.9 million bbl to 141.6 million bbl.

EIA said imports of crude into the US declined 336,000 b/d to 8.6 million b/d last week. In the 4 weeks through Nov. 4, crude imports averaged 8.7 million b/d, up 34,000 b/d from the comparable period last year. Gasoline imports averaged 750,000 b/d, while distillate fuel imports averaged 102,000 b/d.

The input of crude into US refineries dropped 358,000 b/d to 14.3 million b/d last week with units operating at 82.6% of capacity, said EIA. Gasoline production decreased to 8.8 million b/d and distillate fuel production declined to 4.3 million b/d.

Energy prices

The December contract for benchmark US light, sweet crudes continued climbing Nov. 7, up $1.28 to $96.80/bbl on the New York Mercantile Exchange. The January contract increased $1.25 to $96.70/bbl. On the US spot market, WTI at Cushing rose $1.28 to $96.80/bbl, in step with the front-month futures price.

Heating oil for December delivery dipped 0.37¢ but closed essentially unchanged at a rounded $3.12/gal on NYMEX. RBOB for the same month declined 2.18¢ to $2.71/gal.

The December natural gas contract increased 4.9¢ to $3.75/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rose 7.3¢ to $3.43/MMbtu.

In London, the December IPE contract for North Sea Brent advanced by 44¢ to $115/bbl. Gas oil for November gained $10 to $994.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes escalated $2.71 to $113.79/bbl.

Contact Sam Fletcher at

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

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

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
Available Webcasts

The Resilient Oilfield in the Internet of Things World

When 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.


On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP,


OGJ's Midyear Forecast 2015

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.


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