MARKET WATCH: Crude oil price rises as stock market rallies

The stock market rallied Dec. 2, posting its highest weekly gain in 3 years as central banks moved to resolve liquidity issues in Europe, but petroleum prices increased only moderately.

James Zhang at Standard New York Securities Inc., the Standard Bank Group, reported, “Oil moved higher on the back of potential political progress over the Euro-zone debt crisis. The US employment report was also broadly supportive for prices.”

Last week Standard & Poor’s 500 Index fully reversed its Thanksgiving week losses and again is “within shooting distance of being unchanged for the year,” said Olivier Jakob at Petromatrix in Zug, Switzerland. “The rally was extremely strong, with the S&P 500 gaining 7.39% during the week for a year-to-date performance [down] 1.06%.”

On Dec. 5, Italy announced a new austerity program. In addition, French President Nicolas Sarkozy and German Chancellor Angela Merkel met to try to reach agreement on how to save the euro through stricter oversight of government budgets.

Zhang reported, “Oil products climbed faster than crude due to low product inventories, which helped to arrest the recent fall in refining margins. The term structures for both Brent and West Texas Intermediate were broadly unchanged—Brent remains stuck in steep backwardation.”

The latest wave of economic optimism “appears to have caught the market off guard and prompted short-covering,” Zhang said. “Meanwhile, commercial hedgers added to their hedging positions on both sides, as volatility declined.”

He said, “This week the market will remain focused on the [Dec. 9] European Union summit. The European Central Bank is set to cut its benchmark interest again on its meeting this week. For the oil market specifically, tension over Iran remained high, which has kept oil price volatility at an elevated level, and the market bidding tail risks. We expect the oil price to remain heated in the near future as supply shortfalls continue. A general liquidity draw-down towards yearend, however, discourages risk-taking. We take our central scenario till yearend as ‘muddle-along’ with a range-bound bias in price action.”

In Houston, analysts with Raymond James & Associates Inc. said, “While the near-term outlook for the oil market remains extremely hazy, our view on the US natural gas market is getting even more bearish. With gas prices now having spent the past few months sub-$4/Mcf, we believe that our prior $4/Mcf price forecast for 2012 was not sufficiently pessimistic. Accordingly, we are taking our 2012 forecast down 50¢ to $3.50/Mcf. We would note that even though our new forecast is likely the low on Wall Street, it is only about 25¢ above the current gas strip. If our assumptions prove to be correct, look for natural gas prices to reach sub-$3/Mcf levels next summer.”

On the oil front they said, “We are again ‘marking to market,’ which this time entails an increase in WTI. Our Brent assumption remains $100/bbl, while our WTI assumption becomes $92.50/bbl (up from $85/bbl). The higher WTI forecast reflects the significantly narrowed WTI-Brent spread as a result of the Seaway pipeline's impending reversal.”

Energy prices

The January and February contracts for benchmark US light, sweet crudes both gained 76¢ to $100.76/bbl and $101.09/bbl, respectively, on the New York Mercantile Exchange. On the US spot market, WTI at Cushing, Okla., also was up 76¢, to $100.96/bbl.

Heating oil for January delivery increased 2.05¢ to $2.99/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 5.83¢ to $2.62/gal.

The January natural gas contract lost 6.4¢ to $3.58/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 10.2¢ to $3.37/MMbtu.

In London, the January IPE contract for North Sea Brent increased 95¢ to $109.94/bbl. Gas oil for December advanced $5.25 to $951.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 25¢ to $109.66/bbl. So far this year, OPEC’s basket price has averaged $107.49/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Anadarko reports 2014 loss, remains upbeat about Wattenberg

02/03/2015 Anadarko Petroleum Corp. announced a 2014 net loss of $1.75 billion, or $3.47/share diluted, including a net loss of $4.05 billion associated with ...

CNOOC cuts capital budget, starts production from Jinzhou 9-3

02/03/2015 CNOOC Ltd. is slashing its capital budget for 2015 by 26-35% to $11.25-12.86 billion compared with last year’s budget. Capital expenditures for exp...

Seven Group buys into Beach Energy

02/03/2015 Media group Seven Group Holdings, Perth, has bought 13.8% of Adelaide-based Beach Energy Ltd. through share purchases fuelling speculation of a pos...

Karve joins Cobalt for Cameia development

02/03/2015 Shashank V. Karve has joined Cobalt International Energy Inc. as executive vice-president in charge of development of deepwater Cameia oil field on...

MARKET WATCH: NYMEX crude oil stays positive on lower rig count

02/03/2015 Oil prices on the New York and London markets closed higher Feb. 2 on positive momentum generated by a falling US rig count, suggesting cuts in pro...

Obama’s proposed fiscal 2016 budget recycles oil tax increases

02/02/2015 US President Barack Obama has proposed his federal budget for fiscal 2016 that he said was designed to help a beleaguered middle class take advanta...

MOL absorbs Eni’s Romanian retail assets

02/02/2015

MOL Group, Budapest, has completed the acquisition of Eni Romania, including 42 service stations to be rebranded under the MOL name.

CNOOC subsidiary inks deal for grassroots refinery

02/02/2015 Hebei Zhongjie Petrochemical Group Co. Ltd., a subsidiary of China National Offshore Oil Corp. (CNOOC), has entered into a $700 million agreement w...

Pessimism mounts over UK offshore industry

02/02/2015

Pessimism about the UK offshore oil and gas industry is gaining momentum.

White Papers

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

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...
Available Webcasts


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

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

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


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


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