MARKET WATCH: Kazakhstan protest slightly boosts crude prices

Protests by oil field workers and police violence in Kazakhstan fanned fear of disruption of petroleum production and slightly boosted crude prices Dec. 19.

Thousands of oil workers have been on strike over in the Mangistau region since May. The New York Times reported hundreds of workers protested in Aktau in western Kazakhstan against a police crackdown on striking workers last week that killed at least 14 strikers and wounded dozens.

However, the front-month natural gas contract dropped 1% in the New York market with mild winter weather reducing demand.

Analysts in the Houston office of Raymond James & Associates Inc. reported, “Equity markets fell on European Central Bank President Mario Draghi's statement that the law forbids him from increasing government bond purchases despite the substantial economic risks that remain. Adding to the markets' down day was news that tighter capital requirements are expected to be issued for financial institutions, pushing the Dow Jones Industrial Average down 0.8% on the day.”

The Oil Service Index and SIG Oil Exploration & Production Index underperformed the broader markets, falling 2.6% and 3.2%, respectively.

Barclays Capital Oil Services & Drilling analysts reported the next” mega-cycle” for the oil services industry is under way. “The European debt situation, concerns of a hard landing in China, and the resulting volatility and depressed valuations in global equity markets are masking this fact,” they said.

They advised, “The reason to own oil services stocks is clear: the world is becoming increasingly short of energy.”

Energy prices

The January contract for benchmark US sweet, light crudes gained 35¢ to $93.88/bbl Dec. 19 on the New York Mercantile Exchange. The February contract increased 30¢ to $94.05/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1 to $93.88/bbl, again matching the front-month futures price.

Heating oil for January delivery declined 2.01¢ to $2.78/gal on NYMEX. Reformulated stock for oxygenate blending for the same month inched up 0.21¢ but closed essentially unchanged for a second day at a rounded $2.49/gal.

The January natural gas contract dropped 3.1¢ to $3.10/MMbtu on NYMEX. On the spot market, gas at Henry Hub, La., was down 2.6¢ to $3.03/MMbtu.

In London, the February IPE contract for North Sea Brent advanced 29¢ to $103.64/bbl. Gas oil for January lost $6.25 to $888/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes decreased 66¢ to $102.91/bbl.

Contact Sam Fletcher at samf@ogjonline.com

 

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