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

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...

USGS: Water usage for fracturing varies widely across shale plays

07/01/2015 The volume of water required to hydraulically fracture wells varies widely across the country, according to the first national analysis and map of ...
White Papers

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

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When 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.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


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

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


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