MARKET WATCH: Optimistic markets continue to rally

Energy prices continued climbing Dec. 21 along with the stock markets, which continued rallying in early trading Dec. 22 after the Labor Department announced initial applications for US unemployment benefits declined for the third consecutive week, down 4,000 to 364,000 for the week ended Dec. 16.

On the other hand, the government reduced its estimate of US economic growth during the third quarter to an annual rate of 1.8% from the 2% previously reported. That’s still the best growth rate of this year, however. Economists are hoping an improving job market—or at least a reduction in layoffs, with an 8.6 unemployment rate in November down from 9% for the previous 2 years—along with a seasonal decline in gasoline prices and a general lack of cold weather to drive up natural gas and fuel oil prices will leave consumers more money for strong holiday shopping to boost economic growth above 3% for the final quarter of this year.

Oil prices have managed to hold up in the face of a strengthening dollar “most likely due to optimism surrounding the health of the US economy,” said analysts at Standard New York Securities Inc., the Standard Bank Group. Additional US economic data scheduled for release today might further influence energy markets, “especially in light of the pre-holiday lack of liquidity,” they said. Market activity appeared to be winding down ahead of the 4-day Christmas holiday weekend.

US inventories

The Energy Information Administration reported Dec. 22 the withdrawal of 100 bcf of natural gas from US underground storage in the week ended Dec. 16. That left 3.63 tcf of working gas in storage, 235 bcf more than at the same time last year and 387 bcf above the 5-year average.

EIA earlier said commercial US crude inventories fell 10.6 million bbl to 323.6 million bbl that same week, far surpassing Wall Street’s consensus for a 2.1 million bbl decline. Gasoline stocks decreased 400,000 bbl to 218.4 million barrels, opposite expectations of a 1.5 million bbl gain. Distillate fuel inventories dropped 2.4 million bbl to 139.1 million bbl, beyond the market outlook for an 800,000 bbl decline (OGJ Online, Dec. 21, 2011).

“The weekly draw in stocks basically wipes out the stock build of the last 2 weeks,” said Olivier Jakob at Petromatrix in Zug, Switzerland.

The EIA report of oil inventories showed “a substantial stock draw of 18 million bbl,” including 14 million bbl in the main crude plus clean petroleum products category, with 11 million bbl coming from crude, Jakob noted. “We must take those 11 million bbl of crude oil stock draw with some caution,” he warned. “First, 5 million bbl were in [the DOE’s Petroleum Administration for Defense District] PADD 5 [on the West Coast], which is discounted [because it] is disconnected from the rest of the US” by the Rockies as far as movement of crude and petroleum products.

Second, he said, “The Houston Ship Channel was shut during most of the week, resulting in many ships waiting outside the channel and not being able to discharge their cargo. The reported crude oil imports into the US Gulf Coast at 3.7 million b/d are a clear statistical outlier, and therefore we need to take the 7 million bbl crude oil stock draw in the US Gulf Coast with a big pinch of salt. Over the last 10 years, there has been only 1 week where gulf coast crude oil imports were reported lower; in other words, if the weekly gulf coast crude oil imports were representative, we would be heading into a total shutdown of gulf coast refineries, and we do not think that this is yet the case. We also need to consider the seasonality of crude oil stock draws in December, replaced by stock build in January and February.”

EIA showed a 1 million bbl draw from crude stocks in Cushing, Okla., but a 1 million bbl stock build in the Midwestern PADD 2, which includes Cushing. “The 4-week average of crude oil imports into PADD 2 has reached a new all-time record high,” Jakob said.

The small decline in US gasoline stocks last week “is insignificant given the overall levels of US stocks and poor consumer demand,” said Jakob. “On the other hand, the distillate stocks had a 2.3 million bbl stock draw, which continues to make distillate stocks trending towards 2007-2008 levels.”

He said, “Technically, West Texas Intermediate is still aiming for the resistance of $100/bbl as we are getting closer to the long Christmas weekend. Front-rolling WTI is now down 2.28% for the year and still needs an additional push higher to end the year in the green; the Standard & Poor’s 500 Index, however, was stalling a bit yesterday.” Jakob said, “On WTI we draw a first resistance at $99.30/bbl and then $100/bbl. First support [is] at $98.70/bbl, then $97.50/bbl. The 200-day moving average is at $95.80/bbl.”

Energy prices

The new front-month February contract and the March contract for benchmark US sweet, light crudes were up $1.43 each to $98.67/bbl and $98.85/bbl, respectively, Dec. 21 on the New York Mercantile Exchange. On the US spot market, WTI at Cushing increased $1.45 to $98.67/bbl.

Heating oil for January delivery gained 5.93¢ to $2.91/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 4.12¢ to $2.62/gal.

The February natural gas contract advanced 2.7¢ to $3.16/MMbtu on NYMEX. On the spot market, gas at Henry Hub, La., inched up 0.1¢ to a rounded $3.04/MMbtu on Dec. 21 from a rounded $3.03/MMbtu on Dec. 19, the last previous date for which a price was available.

In London, the February IPE contract for North Sea Brent increased 98¢ to $107.71/bbl. Gas oil for January gained $8.25 to $910.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased $1.93 to $106.98/bbl.

 

Contact Sam Fletcher at samf@ogjonline.com

Related Articles

ExxonMobil spending down 12% to $34 billion

03/04/2015

ExxonMobil Corp. plans $34 billion in capital spending during 2015, representing a 12% decrease from 2014.

Western Australia’s EPA approves Gorgon LNG fourth train

03/04/2015 The Environmental Protection Authority of Western Australia (EPAWA) has approved plans for expansion of the Gorgon-Jansz LNG project on Barrow Isla...

MARKET WATCH: NYMEX, Brent crude prices settle higher on Saudi oil hike

03/04/2015 Oil prices rose on the New York and London markets Mar. 3 after Saudi Arabia raised the official price for its oil by $1/bbl for US delivery and $1...

Bear Head LNG requests DOE permits to export US natural gas

03/03/2015 Liquefied Natural Gas Ltd.’s wholly owned subsidiaries, Bear Head LNG Corp. and Bear Head LNG LLC (USA), have filed an application with the US Depa...

EIA forecasts continued rise in US oil production from gulf

03/03/2015 Crude oil production from the Gulf of Mexico will reach 1.52 million b/d in 2015 and 1.61 million b/d in 2016—or respectively 16% and 17% of total ...

Pennsylvania governor proposes natural gas severance tax

03/03/2015 Pennsylvania Gov. Tom Wolf proposed a $29.9 billion budget on Mar. 3 that includes $2.5 billion of net tax increases for fiscal 2016, including a 5...

Shell moves to business-as-usual plan for strike-impacted refineries

03/03/2015 As the United Steelworkers union (USW) strike enters its fifth week, Royal Dutch Shell PLC, which serves as lead company for National Oil Bargainin...

BOEM proposes lease sale for western Gulf of Mexico

03/03/2015 The US Bureau of Ocean Energy Management (BOEM) will offer more than 21 million acres offshore Texas for oil and gas exploration and development, i...

Shell Canada withdraws application for Pierre River heavy oil project

03/03/2015

Shell Canada Ltd. has withdrawn its regulatory application for the proposed Pierre River heavy oil mine north of Fort McMurray.

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


Cognitive Solutions for Upstream Oil and Gas

When 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

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


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