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 Net for last week, index investors are estimated to have withdrawn $7.53 billion from the commodity markets, taking the total withdrawal over the past 3 weeks to $13.45 billion.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

Statoil reduces capital budget by $2 billion following 4Q losses

02/06/2015 Statoil ASA has reduced its organic capital expenditure to $18 billion in 2015 from $20 billion in 2014. The move comes on the heels of a fourth qu...

Chinese regulators approve Sinopec’s plan for grassroots refinery

02/06/2015 China’s National Development and Reform Commission (NDRC) has approved Sinopec Beijing Yanshan Petrochemical Co. Ltd., a subsidiary of China Nation...

BOEM schedules public meetings about draft proposed 5-year OCS plan

02/06/2015 The US Bureau of Ocean Energy Management will hold the first of 20 public meetings in Washington on Feb. 9 to receive public comments on potential ...

Union strike ongoing at US refineries as negotiations continue

02/06/2015 A strike by union workers at nine US refining and petrochemical production plants remains under way as the United Steelworkers Union (USW) continue...

NCOC lets $1.8-billion pipeline contract for Kashagan field

02/06/2015 North Caspian Operating Co. (NCOC) has let a $1.8-billion engineering and construction contract to ERSAI Caspian Contractor LLC, a subsidiary of Sa...

AOPL releases 2015 safety performance and strategic planning report

02/06/2015 The Association of Oil Pipe Lines is committed to further improvements despite a 99.99% safe petroleum liquids delivery rate, AOPL Pres. and Chief ...

MARKET WATCH: NYMEX oil price bounces back up somewhat

02/06/2015 Crude oil prices on the New York market bounced up $2/bbl to settle slightly above $50/bbl Feb. 5. The positive momentum continued during early Jan...

Congressional Republicans renew bid to halt sue-and-settle maneuvers

02/05/2015 Calling it an affront to regulatory accountability that results in unchecked compliance burdens, US Sen. Charles E. Grassley (R-Iowa) and US Rep. D...

Oil-price collapse may aggravate producing nations’ other problems

02/05/2015 The recent global crude-oil price plunge could be aggravating underlying problems in Mexico, Colombia, and other Western Hemisphere producing natio...
White Papers

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...

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...
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