MARKET WATCH: Economic concerns set back oil prices

Oil prices inched higher most of the day but retreated in late trading May 22, with crude down 1% in the New York market among festering financial problems in the Euro-zone.

However, natural gas gained almost 4% in that market on expectations warmer weather will boost demand for power generation. Analysts in the Houston office of Raymond James & Associates Inc. reported, “Taking the cue from the broader market and oil, energy stocks tumbled as the Oil Service Index and SIG Oil Exploration & Production Index dropped 0.6% and 0.9%, respectively.” Crude and gas futures were lower in early trading May 23.

Walter de Wet at Standard New York Securities Inc., the Standard Bank Group, said Brent crude is still below the long-term trend support-line that started at the end of 2008 and remains vulnerable. “Brent crude needs to close above $108.80/bbl before it would appear to be on a better footing technically,” he said. “However, the euro weakness, or broad-based US dollar strength, is adding downward pressure to crude oil prices.”

De Wet said, “While the Brent crude oil market is fairly tight, as reflected in the backwardation, the product market is also weak. Inventory levels are at the higher end of the levels seen in the past 5 years while product demand…remains weak.”

Olivier Jakob at Petromatrix in Zug, Switzerland, said, “Refining margins in the Mediterranean  have been under pressure of the strong physical premiums for the last 2 weeks, but those have started to correct lower as margins are starting to move back to negative territory. In northern Europe, the Forties benchmark [crude] is still very strong; the danger for the Brent market, however, is that the artificial economics of Forties [crude marketed] to South Korea starts to have too significant of an impact on the price-discovery value of the Brent contract, given that the shipments of Forties crude to South Korea have nothing to do with supply and demand factors.”

However, Jakob said, “The refining margins on the US Gulf Coast are very strong, and this is a trend that will not go away, since at market-price the US Midwest and increasingly the US Gulf Coast have access to the cheapest crude available and also to cheap energy through US natural gas prices. The Seaway pipeline reversal has started; it will take about 2 weeks for the crude to reach the US Gulf Coast, and the line-fill will be about 2.3 million bbl. As work progresses on the pump stations, the flows will increase from the initial 150,000 b/d. Hence the growth to 400,000 b/d of capacity by the end of the year should be gradual with the start of each new pump configuration, rather than come as a whole at the end of the year.”

US inventories

The Energy Information Administration reported May 23 commercial US crude inventories increased 900,000 bbl to 382.5 million bbl in the week ended May 18, well below Wall Street’s consensus for a gain of 1.7 million bbl. Gasoline stocks fell 3.3 million bbl to 201 million bbl in the same period, exceeding analysts’ expectations of a 700,000 bbl draw before the start of the summer driving season on the upcoming Memorial Day holiday. Both finished gasoline and blending components decreased last week. Distillate fuel inventories decreased 300,000 bbl to 119.5 million bbl, short of a consensus for a 500,000 bbl decline.

The import of crude into the US dropped 298,000 b/d to 8.6 million b/d last week. In the 4 weeks through May 18, crude imports averaged 8.8 million b/d, down 98,000 b/d from the comparable period in 2011. Gasoline imports last week averaged 575,000 b/d while distillate fuel imports averaged 124,000 b/d.

The input of crude into US refineries was down 57,000 b/d to just under 15 million b/d last week with units operating at 88.1% of capacity. Gasoline production decreased to 8.9 million b/d. Distillate fuel production increased to 4.5 million b/d.

Energy prices

The expiring June contract for benchmark US light, sweet crudes lost 91¢ to $91.66/bbl May 22 on the New York Mercantile Exchange. The July contract fell $1.01 to $91.85/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., matched the front-month futures contract, down 91¢ to $91.66/bbl.

Heating oil for June delivery inched up 0.11¢ but closed essentially unchanged at a rounded $2.86/gal on NYMEX. Reformulated stock for oxygenate blending for the same month dipped 0.31¢ but also closed unchanged, at a rounded $2.94/gal.

The June natural gas contract climbed 9.8¢ to $2.71/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., slipped 0.7¢ to $2.59/MMbtu.

In London, the July IPE contract for North Sea Brent was down 40¢ to $108.41/bbl. Gas oil for June continued to increase, up $6.25 to $917.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes gained 23¢ to $106.16/bbl.

Contact Sam Fletcher at

Related Articles

EIA: US oil output fell 50,000 b/d in May

07/07/2015 Total US crude oil production dropped 50,000 b/d in May compared with April and is expected to continue falling through early 2016 before growth re...

BLM approves ROW for Elko gas pipeline expansion project

07/07/2015 The US Bureau of Land Management’s Tuscarora, Nev., field office signed a decision record approving a right-of-way for Paiute Pipeline Co.’s (PPC) ...

Obama urged by IPAA president to lift ban on US crude exports

07/07/2015 Commending the administration for its actions allowing some condensate to be exported as a petroleum product, Independent Petroleum Association of ...

AER shuts in 16 Murphy Oil sites in Peace River region for noncompliance

07/07/2015 Alberta Energy Regulator said it has shut in or partially shut in 16 sites operated by Murphy Oil Co. Ltd. in the Peace River region. The sites wer...

MARKET WATCH: NYMEX, Brent oil prices take dive on world oil oversupply concerns

07/07/2015 US light, sweet crude oil prices plummeted more than $4/bbl on the New York market July 6, marking a 5-month low, while Brent crude oil prices on t...

WAFWA: Aerial survey finds lesser prairie chicken population grew

07/06/2015 A recent range-wide aerial survey found the lesser prairie chicken population rose 25% from 2014 to 2015, the Western Association of Fish & Wil...

Buru awarded onshore Canning licenses

07/06/2015 Buru Energy Ltd., Perth, and Mitsubish Corp. have been granted two production licenses for Ungani oil field in the onshore Canning basin of Western...

Cenovus sells royalty business for $3.3 billion

07/06/2015 Cenovus Energy Inc., Calgary, inked an agreement to sell its wholly owned subsidiary Heritage Royalty LP to Ontario Teachers’ Pension Plan for gros...

CERI: Energy, operational efficiencies possible in Canadian oil, gas

07/06/2015 Measures can be taken by operators in the expanding resource-intensive Canadian oil and gas sector to improve both energy efficiency and operationa...
White Papers

Definitive Guide to Cybersecurity for the Oil & Gas Industry

In the Oil and Gas industry, there is no single adversary and no single threat to the information tech...

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
Available Webcasts

Better Data, Better Analytics, Better Decisions

When Tue, Oct 27, 2015

The Oil & Gas industry has large amounts of data stored in multiple systems which are purpose built for certain tasks. However, good decisions require insights based upon the data in all of these systems. These systems in turn do not talk to each other. So the process of analyzing data, gaining insights, and making decisions is a slow one and often a flawed one. Good decisions require accurate analytics and accurate analytics require superior/sustainable data quality and governance. This webinar focuses on:

  • The importance of data quality and governance
  • How technological advances are making data quality and governance sustainable in order to get the accurate analytics to make solid decisions.

Please join us for this webcast sponsored by Seven Lakes Technologies and Noah Consulting.


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.


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