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

Colorado commission to resume hearing on oil, gas fines, penalties

01/05/2015 Colorado’s Oil & Gas Conservation Commission was scheduled to resume a hearing at 9 a.m. MST on Jan. 5 on implementing legislation which would ...

MARKET WATCH: NYMEX and Brent oil prices dip to new 5-year lows

01/05/2015 Oil prices on the New York market settled Jan. 2 below $53/bbl, marking the lowest closing price in more than 5 years, while Brent for February del...

BIS lists six considerations for condensate as a potential export

01/02/2015 The US Bureau of Industry and Security listed six considerations it will use to help determine whether US-produced crude oil condensate is a petrol...

Keystone XL looms large as 114th Congress prepares to meet

01/02/2015 The US Senate Energy and Natural Resources Committee scheduled a hearing for Jan. 7 on legislation to approve the proposed Keystone XL crude oil pi...

American Eagle suspends oil drilling in Bakken for 2015

01/02/2015 American Eagle Energy Corp., Denver, has suspended its 2015 drilling budget and does not anticipate resuming drilling operations until crude oil pr...

MARKET WATCH: NYMEX crude oil futures end 2014 below $54/bbl

01/02/2015 The slump in oil prices worldwide continued on the last trading day of 2014 with US light, sweet crude closing at less than $54/bbl on the New York...

MARKET WATCH: NYMEX crude oil futures move up slightly awaiting inventory

12/31/2014 Crude oil prices on the New York market rose modestly on Dec. 30 awaiting the weekly US government report on crude oil and product supplies. Prices...

Williams postpones Geismar ethylene sales

12/31/2014 Williams Partners LP once again has postponed sales of ethylene production from its newly rebuilt Geismar, La., olefins plant amid ongoing efforts ...

Gazprom buys South Stream shares from partners

12/30/2014 OAO Gazprom has purchased shares in South Stream Transport BV from Italy’s Eni SPA 20%, Germany’s Wintershall AG 15%, and France’s EDF Energy 15%. ...

White Papers

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

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Available Webcasts



The Future of US Refining

When 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

When 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



On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


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