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

Inhofe, Lankford say new BIA rules threaten Osage oil operations

07/10/2015 New US Bureau of Indian Affairs regulations that increase production expenses on tribal lands could put the Osage Nation out of business, Oklahoma’...

House panel’s crude export ban hearing weighs urgency against caution

07/10/2015 A US House Energy and Commerce subcommittee hearing on legislation to repeal the ban on exporting US-produced crude oil quickly broke along party l...

Chevron Phillips Chemical makes executive appointments

07/10/2015

Chevron Phillips Chemical Co. LLC has made several executive appointments, all effective Aug. 1.

Twelve workers killed in Nigeria pipeline explosion

07/10/2015 Eni SPA reported that an explosion occurred July 9 at the repair site for the Tebidaba-Clough Creek oil pipeline in Nigeria’s onshore Niger Delta.

Gov. Tomblin forms West Virginia oil, gas safety commission

07/10/2015 West Virginia Gov. Earl Ray Tomblin (D) established the oil and gas safety commission he announced in his 2015 State of the State address. The grou...

MARKET WATCH: NYMEX, Brent crude oil prices rebound more than $1/bbl

07/10/2015 Prices for US light, sweet crude oil and Brent crude each rebounded by more than $1/bbl on their respective markets July 9, and analysts attributed...

Transco seeks FERC approval for New York Bay Expansion project

07/09/2015 Transcontinental Gas Pipe Line Co. LLC (Transco), a wholly owned subsidiary of Williams Partners LP, has filed an application with the US Federal E...

House Oversight panel subpoenas Kerry for Keystone XL documents

07/09/2015 The US House Oversight and Government Reform Committee issued a subpoena to US Sec. of State John F. Kerry for reports, recommendations, letters, a...

MARKET WATCH: NYMEX crude oil prices drop for fifth consecutive trading session

07/09/2015 US light, sweet crude oil prices settled slightly lower on the New York market July 8 for the fifth consecutive trading session, and analysts attri...
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

On Demand

OGJ's Midyear Forecast 2015

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

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


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