MARKET WATCH: High crude inventory, weak market indicators bring down oil prices

Energy prices continued dropping May 31 with the front-month crude futures contract down 1.5% in the New York market following a larger-than-expected inventory increase.

“Natural gas was flat on the day, but the Energy Information Administration estimated that March demand for the commodity fell 5.4% year-over-year due to unusually mild weather in the first quarter,” said analysts in the Houston office of Raymond James & Associates Inc. The Dow Jones Industrial Average dipped 0.2% to conclude “its worse month in 2 years,” down a net 6.2% in May. “The Standard & Poor’s 500 Index fared similarly,” Raymond James analysts reported.

They said, “A slew of economic data pointed to a weakening employment picture and lackluster economic growth here in the US. Initial jobless claims rose more than expected last week, while the private sector added fewer jobs than expected. Also, the US economy grew at a slower pace than expected in the first quarter of this year.”

James Zhang at Standard New York Securities Inc., the Standard Bank Group, blamed disappointing US jobs data, the latest China Purchasing Manager Index survey showing a near halt in manufacturing, and the “ongoing woes of the Euro-zone debt crisis” for undermining oil prices. “Oil products followed crude down, as the sell-off took place across the board,” he said. “The time spreads in Brent also declined further, while the front-end of the West Texas Intermediate curve held firm as the market anticipates that the reversal of the Seaway Pipeline will alleviate the glut at Cushing, Okla.”

Zhang said, “For now, the market is focusing on the Euro-zone crisis, in particular, the developments in Greece and Spain. However, data from the US and China have been downbeat recently, which added to the bearish sentiment.”

US inventories

EIA reported US crude inventories increased by 2.2 million bbl to 348.7 million bbl in the week ended May 25, above the Wall Street consensus for a 1 million bbl increase. It marked the 10th consecutive week of crude inventory gains. Gasoline stocks decreased 800,000 bbl to 200.2 million bbl, less than the expected 1 million bbl draw. Finished gasoline stocks decreased while blending components remained unchanged. Distillate fuel inventories fell 1.7 million bbl to 117.8 million bbl last week; analysts had expected distillate stocks to remain unchanged.

The Department of Energy agency also reported the injection of 71 bcf of natural gas into US underground storage in the week ended May 25, matching Wall Street’s consensus. That brought working gas in storage to 2.815 tcf, up 732 bcf from the same period a year ago and 724 bcf above the 5-year average (OGJ Online, May 31, 2012).

Crude imports increased 473,000 b/d last week, contributing to the inventory build. “Gasoline and distillate inventories fell, coinciding with a 3.5% and 7% week-over-week increase in gasoline and distillate demand, respectively,” said Raymond James analysts. “The refinery utilization rate ticked up a percentage point to 89.1% as driving season has officially begun. Overall petroleum demand was down 1.9% week-over-week and is down 2.6% compared to the same period last year.” Crude inventories at the key Cushing storage site continued to rise, but only marginally. This was the first EIA inventory report to reflect the reversal of Seaway Pipeline to move crude from Cushing to the Gulf Coast.

Energy prices

The July and August contracts for benchmark US light, sweet crudes each dropped $1.29 to $86.53/bbl and $86.85/bbl, respectively, May 31 on the New York Mercantile Exchange. On the US spot market, WTI at Cushing was down $1.29 to $86.53/bbl in step with the front-month futures contract

The expiring June contract for heating oil fell 3.36¢ to $2.71/gal on NYMEX. Reformulated stock for oxygenate blending for the same month lost 3.32¢ to $2.83/gal.

The July natural gas contract inched up 0.4¢ but closed essentially unchanged at a rounded $2.42/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., decreased 6.5¢ to $2.33/MMbtu.

In London, the July IPE contract for North Sea Brent was down $1.60 to $101.87/bbl. Gas oil for June dropped $11.75 to $870.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes lost $1.69 to $101.06/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

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 Wed, Oct 7, 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.

register:WEBCAST


The Resilient Oilfield in the Internet of Things World

When 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.

register:WEBCAST



On Demand

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

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

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