MARKET WATCH: Oil prices rise on hopes of federal stimulation of economy

Oil prices rose modestly Aug. 22 with crude up 0.6% in the New York market as anxious traders found what they hoped for in the minutes of the latest Federal Reserve meeting—indication a third effort at quantitative easing may come soon if the economy doesn't improve faster.

Minutes of the July 31-Aug. 1 meeting of the Federal Open Market Committee were released Aug. 22 and showed several members thought more monetary stimulus would be needed fairly soon unless economic activity improved. Market optimism was soon blunted, however, when St Louis Federal Reserve Pres. James Bullard said US economic data has strengthened since the meeting, and immediate action may not be warranted.

“It’s perhaps worth noting that previous Fed easing measures have generally happened when the markets were under stress. This time, the Standard & Poor’s 500 Index is back around the highest it’s been in 4 years while commodity prices are stabilizing and recovering rather than teetering on the edge of free-fall,” said Leon Westgate at Standard New York Securities Inc., the Standard Bank Group. “It will be interesting to see therefore how much impact any easing has this time round, assuming of course it happens at all.”

Meanwhile, the Hong Kong and Shanghai Banking Corp.’s Chinese Flash Manufacturing Purchasing Managers Index (PMI) released overnight deteriorated to 47.8 in August from 49.3 in July, “suggesting the Chinese economy is continuing to struggle badly,” Westgate reported. However, investment markets apparently assume the Chinese will embark on further easing measures of their own, he said.

Commodity and equity prices were down in early trading Aug. 23 after the US Department of Labor reported applications for unemployment benefits increased by 4,000 last week to 372,000 new filings, indicating possibly a slower rebound in August than in July. Major economic indexes in Germany, France, Greece, and Spain also were down.

On the up side, however, the Department of Commerce reported US new-home sales increased 3.6% to a seasonally adjusted annual rate of 372,000—the same as in May, which was the highest since April 2010.

US inventories

The Energy Information Administration reported the injection of 47 bcf of natural gas into US underground storage in the week ended Aug. 17, up from Wall Street’s consensus for an input of 40 bcf. That brought working gas in storage to 3.308 tcf, up 423 bcf from the comparable period in 2011 and 357 bcf above the 5-year average.

EIA earlier reported commercial US inventories of crude fell 5.4 million bbl to 360.7 million bbl in the same week, far exceeding the Wall Street consensus for a draw of 300,000 bbl. Crude stocks remain above average for this time of year, however. With end of the summer driving season quickly approaching, gasoline inventories dropped 1 million bbl to 202.7 million bbl last week, less than the 1.4 million bbl decline analysts expected. Both finished gasoline and blending components decreased. Distillate fuel stocks increased by 1 million bbl to 125.2 million bbl, exactly as the market anticipated. Nevertheless, distillates are still below average for this period (OGJ Online, Aug. 22, 2012).

In Houston, analysts at Raymond James & Associates Inc. said, “Combining crude, gasoline, and distillates, inventories fell by 5.4 million bbl [last] week, compared with the consensus forecast for a draw of 700,000 bbl. The large drop in total inventories was primarily driven by a fall in petroleum imports. Total petroleum demand was down 6.4% from the previous week. Refinery utilization remains high amid the summer driving season but decreased from 92.6% to 91.2%. Cushing, Okla., inventories were unchanged week-over-week. Total days of supply actually increased 2.6 days week-over-week and are 1day above year-ago levels.”

Energy prices

The new front-month October contract for benchmark US sweet, light crudes rose 42¢ to $97.26/bbl Aug. 22 on the New York Mercantile Exchange. The November contract increased 38¢ to $97.55/bbl. On the US spot market, West Texas Intermediate at Cushing climbed 58¢ to match the front-month crude’s $97.26/bbl closing in the futures market.

Heating oil for September delivery inched up 0.44¢ to $3.13/gal on NYMEX. Reformulated stock for oxygenate blending for the same month was up 3.9¢ to $3.11/gal.

The September natural gas contract recouped 5.1¢ to $2.83/MMbtu on NYMEX, spurred by Tropical Storm Isaac that is expected to strengthen to a Category 1 hurricane by Aug. 24. The storm was projected to head toward Florida as a hurricane by Aug. 27, but the US National Hurricane Center in Miami said some forecast models show it could go further west into the Gulf of Mexico. On the US spot market, gas at Henry Hub, La., continued its rally, up 3.3¢ to $2.82/MMbtu.

In London, the October IPE contract for North Sea Brent advanced 27¢ to $114.91/bbl. Gas oil for September lost $3.75 to $985/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes dropped 8¢ to $112.20/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

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


OGJ's Midyear Forecast 2015

When 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

When 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



On Demand

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