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

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

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

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
Available Webcasts

On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

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