MARKET WATCH: Disappointing jobs report lowers oil prices

Crude oil prices retreated Apr. 9 following the broader market down on a weak jobs report by the US government at the end of last week, but natural gas regained 0.8% in the New York market.

“The broader market’s losing streak was extended yesterday as the Standard & Poor’s 500 Index slumped 1.1%,” said analysts in the Houston office of Raymond James & Associates Inc. “The light unemployment report sparked comments from [Federal Reserve Chairman] Ben Bernanke that regulators must continue to find ways to strengthen the banking sector. The losing streak is actually tied for the longest losing streak year-to-date at four consecutive sessions.”

James Zhang at Standard New York Securities Inc., the Standard Bank Group, said, “The oil market came under continuous pressure after the US non-farm payroll number for March was significantly below market expectations. Trading volume was low yesterday as much of Europe was on holiday. Oil products declined more than crude, which halted the strong rally in refining margins. The term structures in Brent and West Texas Intermediate were softer as flat prices were sold off amid signs of an improvement in global oil supply.”

Zhang said, “The price activity in the oil market was clearly reflected by changes in net positions held by noncommercials who cut their net length in WTI by 23,500 to 345,600 in futures and options last week, at the sharpest pace since Aug. 9. Net for last week, index investors are estimated to have withdrawn $7.53 billion from the commodity markets, taking the total withdrawal over the past 3 weeks to $13.45 billion. The energy commodity market experienced the majority of this week’s outflow, at $5.65 billion.”

There is strong market resistance at $125/bbl for Brent “due to the drag that even higher prices would most likely have on global economic growth,” said Zhang. “In addition, seasonal slowdown in oil demand during the second quarter tends to reduce global demand for crude by up to 2 million b/d, which is partially reflected by the sharp inventory build in the US. Politically, presidential elections in the US and France increase the chances of a price intervention via a reserve release.”

Zhang expects the oil market to continue its downward correction ahead of renewed nuclear talks between Iran and members of United Nations security council scheduled Apr. 17. “While refining margins in Europe are very strong, the weakness in the Brent spread suggests that the oil market is well supplied. Implied volatility bounced a little since the middle of last week as oil prices came off. However, the market is very volatile, with any rallies in volume being sold into,” he said.

In other news, Raymond James analysts reported, “Today's ceasefire deadline for the Syrian army and rebel forces came and went without any appreciable movement by either side. Under Kofi Annan's peace plan, both sides had to lay down arms today, but violence continues across the country with the army actually having escalated its crackdown in recent days.”

Moreover, they said, “In the past 24 hours, Syrian soldiers fired into Lebanon, killing a journalist they were pursuing on Lebanese territory. A similar incident took place on Syria's northern border, with five people injured at a refugee camp on the Turkish side of the border, including two Turkish nationals. Turkey, of course, is a NATO member, so technically this qualifies as an attack covered by Article V of the NATO treaty, potentially turning a Syrian civil war into an extremely serious international situation. The Turkish government has long been considering creating buffer zones on the border, secured by its own troops, and this latest outrage may be enough to push them in that direction.”

Energy prices

Both the May and June contracts for benchmark US sweet, light crudes retreated 85¢ to $102.46/bbl and $102.98/bbl, respectively, Apr. 9 on the New York Mercantile Exchange. On the US spot market, WTI at Cushing, Okla., also was down 85¢, matching the front-month future contract’s closing price of $102.46/bbl.

Heating oil for May delivery declined 2.33¢ to $3.15/gal on NYMEX. Reformulated stock for oxygenate blending for the same month lost 4.38¢ to $3.30/gal.

The May natural gas contract gained 1.8¢ to $2.11/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dipped 0.5¢ but closed essentially unchanged at a rounded $1.98/MMbtu.

In London, the May IPE contract for North Sea Brent dropped 76¢ to $122.67/bbl. Gas oil for April fell $13.75 to $993.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes declined by 75¢ to $120.40/bbl. So far this year, OPEC’s basket price has averaged $117.19/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
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