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

Total joins global climate initiatives

11/20/2014 Total SA, in what it describes as a consolidation of its efforts to address climate change, will support initiatives of the United Nations Global C...

IHS: ‘Tight-oil test’ under way in US amid lower oil prices

11/20/2014 The vast majority of potential US tight-oil production growth remains economical in the current crude oil price environment, according to a recent ...

Apache to sell Louisiana, Anadarko assets for $1.4 billion

11/20/2014 Houston independent Apache Corp. has agreed to sell noncore southern Louisiana and certain Anadarko basin assets in two separate deals for a combin...

AFPM: Oregon’s proposed low-carbon fuel standard unconstitutional

11/20/2014 Oregon’s proposed low-carbon fuel standards (LCFS) program is unconstitutional, the American Fuel & Petrochemical Manufacturers said in comment...

MARKET WATCH: Crude oil futures prices rangebound

11/20/2014 US light, sweet crude oil prices remained below $75/bbl Nov. 19 on the New York market, while analysts and traders focused on the upcoming meeting ...

Bids spike in Northern Alaska lease sales

11/19/2014 Alaska’s Division of Oil & Gas received 356 bids on 298 tracts in its 2014 Northern Alaska area-wide lease sales, trumping the 92 bids received...

NOIA, API studies list benefits of more federal OCS leasing

11/19/2014 Offshore oil and gas leasing in the eastern Gulf of Mexico and on the US Atlantic and Pacific coasts could create more than 838,000 American jobs a...

Freeport LNG nears construction phase

11/19/2014 Freeport LNG Expansion LP expects later this month to close on financing and begin construction on the first two trains of its natural gas liquefac...

Petrobras initiates start-up of units at Abreu e Lima refinery

11/19/2014 Petroleo Brasileiro SA (Petrobras) has received permission to commission units at its Abreu e Lima refinery (Rnest) at the port of Suape, near Reci...

White Papers

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Increase Equipment Uptime Through Robust Enterprise Asset Management

Whether you operate in the Upstream Drilling and Exploration sector, the Midstream distribution sector...
Sponsored by

Continuous Improvement for Maintenance with Robust Reporting and Analytics

You should have real-time, anywhere access to more relevant and comprehensive data to help manage and ...
Sponsored by

Enterprise Asset Management Solution for Movable Assets in the Oil & Gas Industry

Drilling and exploration companies face several challenges in effectively managing assets both offshor...
Sponsored by

Supporting HSE Needs for Oil & Gas Through Effective Asset Management Practices

The Oil & Gas industry is constantly being challenged to find, extract and deliver cheaper an...
Sponsored by

Sesam for subsea design analysis

With the exponential growth in the subsea sector, a new set of challenges now face the industry. Mostl...
Sponsored by

Is the gas delivery system you’re looking at able to meet your power generation needs: a hydraulic engineer’s perspective

The hydraulic characteristics, and system response to demands and supplies, of natural gas pipelines a...
Sponsored by

Available Webcasts



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

When 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



On Demand

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


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

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