MARKET WATCH: Energy prices decline with slowing Chinese economy

The front-month crude oil contract ended a three-session rally Mar. 12, dropping 1% in light trading in the New York market amid concerns the Chinese economy may be slowing with its largest monthly trade deficit in more than 20 years.

“Natural gas continued to slide, ending the session down 2.4%,” said analysts in the Houston office of Raymond James & Associates Inc.

James Zhang at Standard New York Securities Inc., the Standard Bank Group, reported, “March ICE gas oil futures contracts expired on a strong note at the highest level since May but lead to some sell-off in the time spread at the front-end of the forward curve. Oil products generally followed crude lower, with reformulated stock for oxygenate blending (RBOB) gasoline being the most resilient, as the market continued to focus on the reduced refining capacity along the East Coast of the US. The Brent structure was a touch softer, and so were most physical price differentials.”

Zhang said, “The oil market appears to remain in a consolidation mood as far as flat prices are concerned. There have been few headlines about the Iranian sanctions in recent days, with focus having shifted to the negative impact from high oil prices. Historical data suggests that the price rally since the beginning of this year is likely to cut global growth by around 0.25% to 0.5%, which is likely to be reflected in the economic data release in the coming month, if the price remains heated. It is worth noting the speed of price increase measured year-over-year…has been much smaller than the price spike during the first 4 months of last year, which should tame the negative effect to some extent.”

Olivier Jakob at Petromatrix in Zug, Switzerland, noted warmer than normal temperatures in both Europe and the US have reduced any rush to refill heating oil tanks. “In the US, the [temperature] deviations to normal are extreme and will also be a continued pressure point on US natural gas,” he said. “The temperature deviations in Europe are not as extreme as in the US, but in Europe we are starting to monitor more closely the water levels on the Rhine; they are trending lower, and if the trend is continued it will contribute to product backing up in Amsterdam, Rotterdam, and Antwerp, which will be negative for the ICE gas oil spreads or the ICE gas oil crack.”

Jakob reported, “Buzzard [field] is said to be experiencing problems again. The Brent front spreads did not move much yesterday, but if Buzzard starts to yo-yo again, we don’t see the risk-reward of being on the short side of the Brent spreads. Any greater backwardation in Brent on the back of Buzzard would also be negative for the ICE gas oil crack.

In other news, President Barack Obama “is coming under greater pressure from the rising price of gasoline,” said Jakob. “He continues to blame the high oil prices on ‘loose talk’ of war the same day that the US sends a third aircraft carrier to the Persian Gulf.”

Executives of the US Federal Reserve System met Mar. 13, but analysts expected no major announcement.

Energy prices

The April contract for benchmark US sweet, light crudes dropped $1.06 to $106.34/bbl Mar. 12 on the New York Mercantile Exchange. The May contract lost $1.03 to $106.84/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.06 to $106.34/bbl.

Heating oil for April delivery declined 2¢ to $3.24/gal on NYMEX. RBOB for the same month slipped 0.94¢ to $3.32/gal.

The April natural gas contract fell 5.5¢ to $2.27/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was down 3.1¢ to $2.16/MMbtu.

In London, the April IPE contract for North Sea Brent decreased 64¢ to $125.34/bbl. The expiring March gas oil contract was unchanged at $1,033.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes retreated 27¢ to $123.88/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

BOEM publishes second final SEIS for 2008 Chukchi Sea lease sale

02/13/2015 The US Bureau of Ocean Energy Management published a fresh supplemental environmental impact statement for a Chukchi Sea federal oil and gas sale o...

Lukoil lets contract for Uzbekistan gas processing plant

02/13/2015 Russia’s OAO Lukoil has let a contract to a consortium headed by South Korea’s Hyundai Engineering Co. Ltd., Seoul, for the construction of its lon...

Horn Petroleum to reduce Puntland exploration program

02/13/2015 Horn Petroleum Corp., Vancouver, BC, will reduce its presence in Bosaso, Puntland (Somalia), and will “refrain from any operational activity and as...

Birol named to IEA executive director post

02/13/2015 The International Energy Agency’s governing board confirmed the appointment of Fatih Birol as the agency’s next executive director. Birol succeeds ...

Partners submit Johan Sverdrup development plan

02/13/2015 Partners Statoil ASA, Lundin Petroleum AB, Petoro, Det Norske Oljeselskap ASA, and Maersk Oil have submitted a plan for development and operation (...

MARKET WATCH: NYMEX crude oil price jumps more than $2/bbl

02/13/2015 Crude oil prices on the New York market jumped by more than $2/bbl Feb. 12 to settle above $51/bbl, which analysts attributed to more oil and gas c...

Apache’s 2015 capital budget less than half of last year’s $8.5 billion

02/12/2015 Apache Corp., Houston, plans a capital budget of $3.6-4 billion in 2015, with $2.1-2.3 billion directed toward onshore North America and $1.5-1.7 b...

Alaska LNG project partners file resource reports with FERC

02/12/2015 A series of draft environmental and socioeconomic reports for the Alaska LNG project have been submitted to the US Federal Energy Regulatory Commis...

Total reduces budget by 10% to $23-24 billion

02/12/2015 Total SA plans to lower its organic investments to $23-24 billion in 2015 from $26.4 billion in 2014 by reducing spending in brownfield development...
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


Prevention, Detection and Mitigation of pipeline leaks in the modern world

When 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



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


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