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

Related Articles

Linn Energy, Quantum complete AcqCo deal

07/06/2015 Linn Energy LLC, affiliate LinnCo LLC, and Quantum Energy Partners have signed definitive agreements to fund the acquisition and development of oil...

MARKET WATCH: NYMEX oil prices fall on rise in US rig count

07/06/2015 US light, sweet crude oil prices edged down going into the July 4 holiday weekend on the New York market after Baker Hughes Inc. reported July 2 th...

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...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

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
Available Webcasts

Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


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