MARKET WATCH: Middle East tensions hike oil prices

Crude oil prices continued to climb July 16 with traders focusing more on potential threats to international supply and less on dwindling demand in a weakening economy—at least temporarily.

A US Navy refueling ship fired on a small fishing boat July 16 in the Strait of Hormuz, killing one unarmed fisherman and wounding two others. The Navy said the ship first fired warning shots to signal the boat to stay clear, and then fired at the fishing vessel when it failed to comply. The fishing boat is registered to an UAE-based company but was crewed by Indian nationals. Both the Navy and UAE officials are investigating the incident.

The event highlights the increasing tension among Iran, the US, and European countries in the conflict over Iran’s proposed nuclear program. “Iran has once again threatened to interrupt oil traffic through the Strait of Hormuz; although unlikely, this is enough to raise market concerns. The US has also stepped up its political rhetoric, saying [it] ‘will use all elements of America’s power to prevent Iran from obtaining a nuclear weapon,’” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.

He reported, “The crude oil markets enjoyed some upside yesterday, with that momentum continuing overnight and pushing Brent to breach $104/bbl this morning, with West Texas Intermediate trading around $88.50/bbl. This has occurred despite the International Monetary Fund’s downward revision of global growth (2012 forecasts revised to 3.5% year-over-year from 3.6%) accompanied by an outlook emphasizing considerable downside risks to these forecasts.”

Speculation whether the US Federal Reserve will initiate a third program of “quantitative easing” (QE) to stimulate the flagging economy also has buoyed oil prices. “Yesterday’s reaction to weak US retail sales data shows just how hungry the market is for QE,” Ground said.

However, the stock market fell in early trading July 17 after Fed Chairman Ben Bernanke in his semiannual report to Congress said the economy has weakened and unemployment reduction is likely to be slow. He reiterated the Fed is ready to take additional steps to bolster the economy “if needed” but again gave no hint as to what action may be taken or when.

Energy prices

The August contract for benchmark US sweet, light crudes increased $1.33 to close at $88.43/bbl July 16 on the New York Mercantile Exchange. The September contract gained $1.31 to $88.81/bbl. On the US spot market, WTI at Cushing, Okla., was up $1.33 to $88.43/bbl.

Heating oil for August delivery rose 3.95¢ to $2.83/gal on NYMEX. Reformulated stock for oxygenate blending for the same month advanced 3.86¢ to $2.85/gal.

The August natural gas contract dropped 7.3¢ to $2.80/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., continued to rally, up 2.8¢ to $2.90/MMbtu.

In London, the August IPE contract for North Sea Brent closed at $103.55/bbl July 16, up $1.15 for the day. Gas oil for August rose $9.50 to $859/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 83¢ to $99.93/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Shell cuts $15 billion in spending for 2015-17

01/30/2015 Royal Dutch Shell PLC has curtailed more than $15 billion in potential spending over the next 3 years, but is not “not overreacting to current low ...

Victoria extends drilling, fracing ban

01/30/2015 The new Victorian Labor government of premier Daniel Andrews has extended the coal seam gas (CSG) exploration and hydraulic fracturing ban in the s...

Chevron’s $35 billion capital budget down 13% from last year

01/30/2015 Chevron Corp. will allocate $35 billion in its capital and exploratory investment program for 2015, including $4 billion of planned expenditures by...

US Senate passes bill approving Keystone XL pipeline project

01/30/2015 The US Senate has passed a bill approving construction of the proposed Keystone XL crude oil pipeline by a 62-36 vote after 3 weeks of debate. Nine...

Oxy cuts capital budget by a third

01/30/2015 In the midst of falling oil prices, Occidental Petroleum Corp., Houston, expects to reduce its total capital spending for 2015 to $5.8 billion from...

MARKET WATCH: NYMEX natural gas prices drop after storage report

01/30/2015 US natural gas closed at its lowest price in more than 2 years on the New York market Jan. 29 following the government’s weekly gas storage report,...

Pennsylvania governor reinstates state forest drilling moratorium

01/29/2015 Pennsylvania Gov. Tom Wolf (D) signed an executive order fully reinstating a 2010 moratorium on new oil and gas leases in state forests and parks. ...

PwC: Low oil prices might drive surge in restructuring in 2015

01/29/2015 Mergers and acquisitions (M&A) in the oil and gas industry hit 10-year highs in terms of deal value and volume in 2014, according to a report f...

DOE could meet 45-day LNG export decision deadline, Senate panel told

01/29/2015 The US Department of Energy would have no trouble meeting a 45-day deadline to reach a national interest determination for proposed LNG export faci...

White Papers

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...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Available Webcasts



The Future of US Refining

When 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



On Demand

Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


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