MARKET WATCH: Gas rises, crude declines in mixed market

Natural gas prices continued climbing in commodity futures and posted a strong rebound in the cash market on Apr. 3, but crude retreated on a lower-than-expected increase in US factory orders, concern over the Euro-zone, and the Federal Reserve’s hesitance to try yet again to stimulate the US economy.

“The oil market is clearly facing headwinds,” said James Zhang at Standard New York Securities Inc., the Standard Bank Group. A market rally prior to the Apr. 17 talks between Iran and the US Security Council “is unlikely,” he said.

“Oil products actually moved higher, which aligned with a hefty product inventory draw reported [after the session closed] by the American Petroleum Institute,” said Zhang. “Time spreads for Brent were weaker as well, which suggests that the tightness in the physical market has been easing despite very strong refining margins. The discount of West Texas Intermediate vs. Brent has now exceeded $21/bbl, which is likely to be driven by the continuous shift of investment money from WTI to Brent.”

Olivier Jakob at Petromatrix in Zug, Switzerland, reported, “Gasoline continues to trade to the stratosphere, with its backwardation and crack widening further. The opposite is, however, true of gas oil, and Brent is losing some of its backwardation despite the loss of cargoes due to the disruption at the Elgin field.” He noted the latest MasterCard Spending Pulse report of US retail gasoline sales at the pump was down 3.5% from the comparable week a year ago and down 5.9% on the 4-week average.

In other news, Reuters reported Saudi Arabia’s King Abdullah bin Abdul-Aziz Al Saud told US Sec. of State Hillary Clinton in a weekend meeting his kingdom won’t reduce production to offset a release of oil by the US and other countries from their strategic petroleum reserves nor will it discount the price of its crude to attract buyers.

“On the bearish side, it confirms that a SPR release is seriously being discussed,” said Jakob. “On the bullish side, if Saudi Arabia will not proactively cut supplies when the SPR is released, it confirms again that even at $125/bbl it does see the need to show more barrels to the world (‘we supply only what our customers ask for’). Our opinion remains that the win-win solution for the US would be to do a sweet-for-sour swap: In 2 years from now the US will be immune from disruption risks in West Africa due to the increased US light crude oil production, [and] the SPR sweet barrels will become much less valuable while the US will still be exposed to disruption risks in the Persian Gulf. A sweet-for-sour swap would also enable Saudi Arabia to allow a supply increase without discounting its official selling price.”

Meanwhile, Jakob said, “The US aircraft carrier USS Enterprise should soon cross the Suez towards the Persian Gulf, but the US Navy has taken the USS Vinson out of the gulf region and returned it to Pacific Command (it will be visiting East India over the weekend). This means that the US will not pressure Iran with three aircraft carriers around it” ahead of renewed talks between Iran and the West. The carrier USS Lincoln remains in the region.

US inventories

The Energy Information Administration said Apr. 4 commercial US inventories of crude jumped by 9 million bbl to 362.4 million bbl in the week ended Mar. 30, far above Wall Street’s consensus for a 2.5 million bbl increase. US crude inventories are above average for this time of year. Gasoline stocks, however, decreased 1.5 million bbl to 221.9 million bbl, slightly exceeding the expected draw of 1.4 million bbl. Both finished gasoline and blending components declined. Distillate fuel inventories remained unchanged at 135.9 million bbl; analysts had expected a 500,000 bbl reduction.

Imports of crude into the US were up 505,000 b/d to 9.8 million b/d last week. In the 4 weeks through Mar. 30, crude imports averaged 9 million b/d, an increase of 59,000 b/d from the comparable period last year. Gasoline imports last week averaged 885,000 b/d while distillate fuel imports averaged 224,000 b/d.

The input of crude into US refineries increased 299,000 b/d to 14.8 million b/d last week with units operating at 85.7% of capacity. Gasoline production increased to 9 million b/d, and distillate fuel production increased to 4.3 million b/d.

Energy prices

The May contract for benchmark US light, sweet crudes fell $1.22 to $104.01/bbl Apr. 3 on the New York Mercantile Exchange. The June contract dropped $1.21 to $104.55/bbl. On the US spot market, WTI at Cushing, Okla., was down $1.22 to $104.01/bbl.

Heating oil for May delivery decreased 2.21¢ to $3.23/gal on NYMEX. Reformulated stock for oxygenate blending for the same month continued climbing, however, up 1.32¢ to $3.40/gal.

The May natural gas contract gained 3.5¢ to $2.19/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., jumped 8¢ to $1.99/MMbtu.

In London, the May IPE contract for North Sea Brent declined 57¢ to $124.86/bbl. Gas oil for April climbed $9 to $1,033.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased $1.33 to $122.95/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Nelson vows to block Murkowski’s stand-alone crude oil bill

07/31/2015 The US Senate Energy and Natural Resources Committee approved Chair Lisa Murkowski’s (R-Alas.) bill to end the ban on exporting US-produced oil. Bu...

Industry 2Q earnings, jobs dissolve amid continued oil-price slump

07/31/2015 A difficult year thus far for the integrated, multinational oil and gas firms caused by low oil prices has been somewhat eased by improved producti...

OGUK survey shows ‘slight improvement’ in outlook in second quarter

07/31/2015

The UK oil and gas industry remains fragile, but the outlook has improved in the second quarter, according to Oil & Gas UK.

Phillips, ETP, Sunoco JV to build, operate Bayou Bridge oil pipeline

07/31/2015 Phillips 66, Houston; Energy Transfer Partners LP (ETP), Dallas; and Sunoco Logistics Partners LP, Philadelphia, have formed a joint venture to con...

MARKET WATCH: Oil futures fall on strengthening dollar

07/31/2015 Light, sweet crude oil prices started July 30 trading with a gain on the New York market, but prices had slipped moderately by settlement, which an...

MOL acquires Czech, Slovak retail assets

07/31/2015

MOL Group, Budapest, completed its acquisition from Eni SPA of retail outlets in the Czech Republic and Slovakia.

FRA issues final rule to keep unattended trains from rolling away

07/31/2015 The Federal Railroad Administration issued a final rule to prevent unattended trains carrying crude oil, ethanol, or other highly flammable content...

Joint venture advances plan for grassroots refinery in North Dakota

07/30/2015 Quantum Energy Inc., Tempe, Ariz., and a joint-venture partner Native Son Holdings LLC (NSH), The Woodlands, Tex., have filed a minor-source air qu...

Shell to shed Japanese refining assets

07/30/2015 Royal Dutch Shell PLC has entered a deal to sell nearly all of its interest in Japanese refiner Showa Shell Sekiyu KK to Idemitsu Kosan Co. Ltd. as...
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