MARKET WATCH: Energy prices mixed in unfocused markets

North Sea Brent fell, West Texas Intermediate continued to increase, and natural gas slipped lower in mixed markets Aug. 17 as traders’ attention remained divided among “unprecedented” high US inventories, escalating Middle East tensions, and no progress in the Euro-zone financial crisis.

The stock market was down Aug. 20 after the German central bank said purchases of European bonds by the European Central Bank may pose substantial risks. A flurry of meetings among various top officials of some European governments is scheduled this week.

The price of Brent retreated Aug. 17 after climbing 28% over 59 days from a low of $91.33/bbl on June 18, said analysts at KBC Energy Economics, a division of KBC Advanced Technologies PLC. “In reality little has changed in both the economic and geopolitical situations over this period,” they said. “We still have the ongoing threat of economic woes coming from the Euro-zone countries, although less vocal at this moment as European politicians take their traditional summer breaks, along with the geopolitical threats of the Middle East being unabated.”

Although commercial US petroleum inventories declined 3 successive weeks through Aug. 10, crude stocks remain high in the historical period of peak summer demand for gasoline. “This drop in crude inventories, led by [US Gulf Coast] declines is representative of high US refinery utilization, running at 92.6% for the first 2 weeks of August. The markets reacting to this inventory drop seemed not to recognize the 1.1 million bbl rise in Cushing, Okla., inventories, so maintaining record inventory highs for WTI’s settlement point. The Brent-WTI differential remains at more than $18/bbl,” KBC analysts reported.

President Barack Obama’s administration talks of a possible preelection release from the US Strategic Petroleum Reserve to drive down prices at the pump. But KBC analysts said such a move “is unwarranted and certainly too late in this year’s peak demand cycle to have any long-term impact on bringing down crude prices.” With the Organization of Petroleum Exporting Countries maintaining 31 million b/d of crude production and barring any major supply disruptions, “the world remains in ample supply,” they said.

Natural gas outlook

In Houston, analysts at Raymond James & Associates Inc. reported, “The US gas market this year has once again proven that the basic economic principle of price impacting demand still does work. Price competition between coal and natural gas for electric power generation (i.e., ‘switching’) has remained the key lynchpin in balancing the natural gas markets this year. With natural gas prices hitting decade-low levels earlier this year, the power markets responded by shutting down coal-fired generation and ramping up usage of gas-fired units.”

They said, “The key question for gas markets is ‘what gas price will be needed to keep the US gas supply-demand equation in balance?’ By our estimates, low gas prices allowed natural gas generation to pick up nearly 6 bcfd of incremental year-over-year demand at the expense of coal (through May). This has happened despite overall electric generation declining by 1.8%. Given the observed pricing sensitivity between coal and gas generation competition so far this year, we would expect natural gas prices will still need to remain range bound between $2.50 and $3.25/Mcf to balance the gas equation through November.”

Energy prices

The September contract for benchmark US light, sweet crudes increased 41¢ to $96.01/bbl Aug. 17 on the New York Mercantile Exchange. The October contract rose 43¢ to $96.32/bbl. On the US spot market, WTI at Cushing was up 41¢ to $96.01/bbl.

Heating oil for September delivery declined 3.03¢ to $3.09/gal on NYMEX. Reformulated stock for oxygenate blending for the same month dropped 5.57¢ to $3.03/gal.

The September natural gas contract dipped 0.5¢ but closed essentially unchanged at a rounded $2.72/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 5.5¢, also closing at $2.72/MMbtu.

In London, the October IPE contract for North Sea Brent fell $1.56 to $113.71/bbl. Gas oil for September gained $2.50 to $979.75/tonne.

OPEC’s Vienna office was closed Aug. 20 with no update available on the average price for its basket of 12 benchmark crudes.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

BP Energy Outlook projects energy demand to jump 37% by 2035

02/17/2015 Global demand for energy is expected to rise by 37% from 2013 to 2035, or by an average of 1.4%/year, due in large part to ongoing economic expansi...

Devon reduces capital budget by 20% in 2015

02/17/2015 Devon Energy Corp., Oklahoma City, plans an exploration and production capital budget of $4.1-4.4 billion in 2015, representing a 20% decline compa...

Ohio Supreme Court rules against municipality in oil and gas case

02/17/2015 The Ohio Supreme Court ruled that the city of Munroe Falls cannot impose local drilling and zoning ordinances that conflict with Ohio state law reg...

Uganda taps Russian firm to build country’s first refinery

02/17/2015 The government of Uganda has selected a consortium led by Russia’s RT Global Resources, Moscow, as its first choice to construct the country’s firs...

Montana governor wants PHMSA to beef up pipeline enforcement in state

02/17/2015 Citing a Jan. 17 leak of 1,200 bbl of crude oil from a ruptured pipeline in eastern Montana, Gov. Steve Bullock (D) asked US Sec. of Transportation...

Derailed West Virginia oil train carried Bakken crude

02/17/2015

A large-scale cleanup and investigation have launched following the Feb. 16 derailment of a CSX crude oil train near Mount Carbon, W.Va.

MARKET WATCH: Brent crude oil reaches above $62/bbl

02/17/2015 The April ICE contract for Brent crude oil prices rose modestly in London to settle above $62/bbl on Feb. 16 while the New York Mercantile Exchange...

Phillips 66 Partners to buy pipeline systems’ interests for $1 billion

02/16/2015 Phillips 66 Partners LP has reached agreement with Phillips 66 to acquire Phillips 66’s interests in three pipeline systems for a total of $1.01 bi...

Bear Head LNG exempted from 2012 Canadian environmental act

02/16/2015 Liquefied Natural Gas Ltd.’s wholly owned subsidiary Bear Head LNG Corp. received notice from the Canadian Environment Assessment Agency (CEAA) tha...
White Papers

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

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

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
Available Webcasts

On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

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


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


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