MARKET WATCH: WTI, crude futures post modest gains in mixed market

Crude oil futures and spot prices posted modest gains Mar. 27 in the New York market ahead of a government report of big jump in inventory while prices for petroleum products and natural gas declined.

“The broader market pulled back from nearly 4-year highs as the first quarter of the year nears an end despite hints from Federal Reserve Chairman Ben Bernanke that an additional round of quantitative easing may be around the corner. Commodities followed suit, with Brent closing down slightly as the US mulls a release of strategic oil reserves to help curb rising fuel prices and forecasts for more mild weather pressure natural gas prices (down 1%),” said analysts in the Houston office of Raymond James & Associates Inc.

Olivier Jakob at Petromatrix in Zug, Switzerland, noted, “Each time the Standard & Poor’s 500 Index drops a few points, we have somebody from the Fed giving a sound-bite that ‘all options are on the table, including [a third round of quantitative easing to stimulate the economy].’ On the other hand, each time we have crude oil increasing by a few points, we have somebody from the Energy Department giving a sound-bite that ‘all options are on the table, including the Strategic Petroleum Reserve.’ That was again the case yesterday; welcome to the new managed economy.”

He said, “France and the UK have joined the SPR release-talk club as Saudi Arabia has failed to deliver any control of the market. It remains that you can’t SPR-out of a war or absolute sanctions against Iran.”

Meanwhile, negotiations between Iran and the West are to reopen Apr. 14 in Istanbul. “That first meeting is likely to be pivotal for the flat direction in the second half of the year. Hedge funds are heavily invested on the long side of crude oil, hence any good vibes coming out of that meeting will be a risk for the current speculative long positions,” Jakob said.

Crude inventory jumps

The Energy Information Administration said Mar. 28 commercial US inventories of crude shot up 7.1 million bbl to 353.4 million bbl in the week ended Mar. 23, far surpassing Wall Street’s consensus of a 2.6 million bbl increase and nearly twice the build earlier reported by the American Petroleum Institute. EIA said gasoline stocks fell 3.5 million bbl to 223.4 million bbl, more than twice the expected decline of 1.6 million bbl. Both finished gasoline and blending components were down. Distillate fuel inventories dropped 700,000 bbl to 135.9 million bbl, exceeding the 500,000 bbl decrease analysts were expecting.

Imports of crude into the US escalated by 1 million b/d to 9.3 million b/d last week. Yet in the 4 weeks through Mar. 23, imports averaged 8.7 million b/d, down just 44,000 b/d from the comparable period a year ago, said EIA officials. Gasoline imports last week averaged 564,000 b/d while distillate fuel imports averaged 165,000 b/d.

The input of crude into US refineries increased a relatively modest 88,000 b/d to 14.5 million b/d last week with units operating at 84.5% of capacity. Gasoline production decreased slightly to 8.8 million b/d, but distillate fuel production increased to 4.3 million b/d.

James Zhang at Standard New York Securities Inc., the Standard Bank Group, said, “The main oil benchmarks have traded in a fairly narrow range since the beginning of this month, except for some extremely short-lived rumor-driven spikes. Brent and West Texas Intermediate prices were little changed yesterday, with implied volatility dipping slightly lower again. Oil products underperformed crude as the recent spike in refining margins appeared too stretched. The very front-end of Brent structure strengthened following a gas leak in Total SA’s Elgin platform in the North Sea, which resulted in a shutdown of the platform with a loss of 60,000 b/d oil production to the Forties stream (OGJ Online, Mar. 27, 2012). In contrast, the WTI structure remained under pressure from a continuous inventory build at Cushing, Okla.”

Jakob said, “Crude oil futures currently lack both volume and volatility. Volume did pick up a bit yesterday, but volatility remains very low. This situation cannot last forever; the backwardation roll in Brent is not enough to be an investment model, and hedge funds can’t have the money parked forever in crude oil length…. Having length in crude oil at these levels can still be a trading theme if there is enough conviction that the war on Iran will intensify.”

The latest MasterCard Spending Pulse report of US retail gasoline sales at the pump report “shows no improvement in US demand: down 7% (653,000 b/d) from a year ago and down 6.6% (607,000 b/d) on the 4-week average,” said Jakob. “The MasterCard report and the DOE implied weekly demand do not tick with the US Vehicles Miles of Travel that was reported higher by 1.6% in January.”

In other news, Sudan and South Sudan accused each other of cross-border attacks on oil-producing areas—“just another sign that oil from South Sudan is unlikely to come back to the market any time soon,” said Zhang. “Low-sulfur fuel oil crack clearly has benefited from the loss of heavy, sweet crude from South Sudan since production was shut in.”

Energy prices

The May and June contracts for benchmark US light, sweet crudes gained 30¢ each to $107.33/bbl and $107.85/bbl, respectively, on the New York Mercantile Exchange. On the US spot market, WTI at Cushing tracked the front-month futures contract, up 30¢ to $107.33/bbl.

Heating oil for April delivery declined 1.02¢ to $3.22/gal on NYMEX. Reformulated stock for oxygenate blending for the same month decreased 1.1¢ to $3.41/gal.

The April natural gas contract lost 1.8¢ to $2.21/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 7.9¢ to $2.09/MMbtu.

In London, the May IPE contract for North Sea Brent retreated 11¢ to $125.54/bbl. Gas oil for April fell $4.25 to $1,025.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes inched up 1¢ to $123.50/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Five fatalities, four missing now confirmed following FPSO explosion offshore Brazil

02/12/2015 BW Offshore now reports five fatalities—all employees of BW Offshore—and four crew members missing following the Feb. 11 explosion of the Cidade de...

TransCanada challenges EPA’s comments on Keystone XL SEIS

02/11/2015 TransCanada Corp. responded to the Feb. 2 comment letter from the US Environmental Protection Agency on the US Department of State’s final suppleme...

PNR cuts capital spending nearly in half

02/11/2015 Pioneer Natural Resources Co. (PNR), Dallas, plans to spend $1.85 billion in 2015 following a fourth quarter in which the company reported a net in...

InterOil wins arbitration over rights dispute with Oil Search

02/11/2015 The International Chamber of Commerce arbitration panel in London has found in favor of InterOil Corp. in its battle with Oil Search Ltd. over pree...

PACE survey finds 69% support for crude exports to trading partners

02/11/2015 More than two thirds of registered voters responding in a nationwide telephone survey commissioned by Producers for American Crude Exports (PACE) s...

New study finds wide variations in gathering systems’ methane samples

02/11/2015 Samples of methane emissions from 114 natural gas gathering stations and 16 processing plants across 13 states found wide variations in amounts act...

EIA: US gasoline prices to average $1/gal less in 2015 vs. 2014

02/10/2015 US regular gasoline retail prices are expected to average $2.33/gal in 2015, down from $3.36/gal in 2014, according to the Energy Information Admin...

MARKET WATCH: NYMEX oil prices rise on revised OPEC forecast

02/10/2015 Crude oil prices climbed more than $1/bbl on Feb. 9 to settle above $52/bbl, marking a third consecutive trading session that ended with higher pri...

MEO, Eni to exchange sections of Timor Sea permit

02/10/2015 MEO Australia Ltd., Melbourne, and Eni SPA—MEO’s joint-venture partner in the NT/P68 permit in the Timor Sea—have decided to split the permit betwe...
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


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


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


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