MARKET WATCH: Oil makes small gains; gas price continues decline

There were small-change gains in oil commodities Dec. 29, but front-month crude failed to rise above the $100/bbl barrier in the New York market. Natural gas prices continued to decline.

“Crude ended the day flat, as petroleum inventories surprised to the upside,” said analysts in the Houston office of Raymond James & Associates Inc. “Natural gas was a much more interesting story, as prices fell 3% to close just 3¢ above the $3 threshold, as a bearish natural gas storage report teamed up with an Energy Information Agency report that placed natural gas production from the Lower 48 at a record high of 71.3 bcfd, up 8.3% year over year.”

The SIG Oil Exploration & Production Index and the Oil Service Index were up 1% and 2%, respectively, despite lack of support from commodity prices. Raymond James analysts reported “a surprisingly strong pre-holiday session” in the equities market as the Standard & Poor’s 500 Index “scraped its way back into positive territory for the year, gaining 1% on positive signs from the US housing and labor markets.” However, commodity and equity prices were down in early trading Dec. 30.

Marc Ground at Standard New York Securities Inc., the Standard Bank Group, said, “Oil prices have benefited from the renewed optimism over the US economy, although momentum seems to be fading here too. Crude oil looks set to be the top pick of 2011, with Brent and West Texas Intermediate recording gains of 16.2% and 11.2% year-over-year.”

Olivier Jakob at Petromatrix in Zug, Switzerland, said crude “continues to trade the global correlations and is receiving some support from concerns about disruptions in the Strait of Hormuz, while relative values are starting to price the concerns about disruptions in the Petroplus [Holdings AG] refining system (OGJ Online, Dec. 29, 2011).”

As a result, he said, “The differentials for Russian crude oil have been plunging for the last 2 days. Dow Jones reports that Libya is about to restart crude oil exports out of Es-Sider [oil port]; if confirmed that would be an additional pressure point for European crude oil differentials. While the Iranian war games are still attracting a lot of media attention, the US aircraft carrier USS Stennis sailed without any problems through the Strait of Hormuz on its way to the Arabian Sea for air support of operations in Afghanistan.”

Imports, exports, and refiners

Jakob said, “The collapse of the Petroplus refining system in Europe would be good news for US Gulf Coast refiners because there is not enough demand in the US for their level of refinery utilization; hence Gulf Coast refineries will need to maintain a high level of product exports. In October, the distillates exports out of the US reached a new all-time record high and were above 1 million b/d while gasoline exports were stable at about 500,000 b/d.”

He said the US would be “running with close to zero crude oil imports” from the Organization of Petroleum Exporting Countries “if the US had not transformed itself since 2008 into a major exporter of distillates.” Jakob said, “The amount of crude oil required to produce the amount of US distillates exports now represents 45% of the US crude oil imports or 89% of US crude oil imports from OPEC.”

He reported, “Total US net exports of petroleum products reached a new record in October. The US was a net exporter of 1.1 million b/d while in October 2007 it was a net product importer of 1.8 million b/d.”

US inventories

The EIA reported commercial US crude inventories increased 3.9 million bbl to 327.5 million bbl in the week ended Dec. 23, opposite the Wall Street consensus for a 2.5 million bbl draw. Gasoline stocks decreased 700,000 bbl to 217.7 million bbl in the same period, exceeding Wall Street’s expectation of a 500,000 bbl draw. Distillate fuel inventories were up 1.2 million bbl to 140.4 million bbl, counter to market anticipation of a 700,000 bbl decrease (OGJ Online, Dec. 29, 2011).

EIA also reported the withdrawal of 81 bcf of natural gas from US underground storage in the same week, leaving 3.5 tcf of working gas in storage. Gas stocks were up by 297 bcf more from the comparable week last year and 428 bcf above the 5-year average.

The 4-week average reported by EIA “implied US demand [for oil] is extremely low, 1.6 million b/d lower than a year ago and 2.5 million b/d lower than in 2007,” Jakob said. “Implied demand for clean petroleum products is down 2.9% vs. last year, but implied demand for “other oils”, a mix of feedstocks mostly for industrial production, has fallen off the cliff and is down 940,000 b/d vs. last year.”

EIA’s recent revision of October data “shows total US demand lower by 261,000 b/d from the weekly estimates, with most of the downward revisions to demand being in distillates (down 298,000 b/d) while gasoline demand was only revised marginally lower (down 24,000 b/d),” Jakob said. Total US demand was at the lowest level reported for the month of October since 1995.

Energy prices

The February contract for benchmark US light, sweet crudes increased 29¢ to $99.65/bbl Dec. 29 on the New York Mercantile Exchange. The March contract gained 31¢ to $99.82/bbl. On the US spot market, WTI at Cushing, Okla., was up 29¢ to $99.65/bbl.

Heating oil for January delivery rose 2.41¢ to $2.92/gal on NYMEX. Reformulated stock for oxygenate blending for the same month advanced 2.88¢ to $2.68/gal.

The new front-month February natural gas contract dropped 9.4¢ to $3.03/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., also was down 9.4¢, to $2.98/MMbtu.

In London, the February IPE contract for North Sea Brent increased 45¢ to $108.01/bbl. Gas oil for January gained $3.25 to $921.50/tonne.

The average price for OPEC’s basket of 12 benchmark crudes dropped 77¢ to $106.75/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Statoil reduces capital budget by $2 billion following 4Q losses

02/06/2015 Statoil ASA has reduced its organic capital expenditure to $18 billion in 2015 from $20 billion in 2014. The move comes on the heels of a fourth qu...

Chinese regulators approve Sinopec’s plan for grassroots refinery

02/06/2015 China’s National Development and Reform Commission (NDRC) has approved Sinopec Beijing Yanshan Petrochemical Co. Ltd., a subsidiary of China Nation...

BOEM schedules public meetings about draft proposed 5-year OCS plan

02/06/2015 The US Bureau of Ocean Energy Management will hold the first of 20 public meetings in Washington on Feb. 9 to receive public comments on potential ...

Union strike ongoing at US refineries as negotiations continue

02/06/2015 A strike by union workers at nine US refining and petrochemical production plants remains under way as the United Steelworkers Union (USW) continue...

NCOC lets $1.8-billion pipeline contract for Kashagan field

02/06/2015 North Caspian Operating Co. (NCOC) has let a $1.8-billion engineering and construction contract to ERSAI Caspian Contractor LLC, a subsidiary of Sa...

AOPL releases 2015 safety performance and strategic planning report

02/06/2015 The Association of Oil Pipe Lines is committed to further improvements despite a 99.99% safe petroleum liquids delivery rate, AOPL Pres. and Chief ...

MARKET WATCH: NYMEX oil price bounces back up somewhat

02/06/2015 Crude oil prices on the New York market bounced up $2/bbl to settle slightly above $50/bbl Feb. 5. The positive momentum continued during early Jan...

Congressional Republicans renew bid to halt sue-and-settle maneuvers

02/05/2015 Calling it an affront to regulatory accountability that results in unchecked compliance burdens, US Sen. Charles E. Grassley (R-Iowa) and US Rep. D...

Oil-price collapse may aggravate producing nations’ other problems

02/05/2015 The recent global crude-oil price plunge could be aggravating underlying problems in Mexico, Colombia, and other Western Hemisphere producing natio...
White Papers

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...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts

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


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

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