MARKET WATCH: Oil prices rise as markets ignore fundamentals, economic danger signs

Crude oil prices registered small gains Sept. 10 as traders ignored ample supply amid more signs of a flagging world economy and instead focused their hopes on the 2-day meeting of US Federal Reserve System executives to open Sept. 12.

“Crude oil markets traded in a tight $1/bbl range as market participants appeared to be waiting on the sidelines,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “There seemed to be some unease creeping into the market, particularly concerning the Euro-zone.”

He said, “We expect much of the same lackluster activity today. Perhaps in the absence of any major economic data flow the market could pay more attention to US trade data [released Sept. 11] although we doubt that this will prompt much activity.” It is becoming “increasingly evident that oil market participants remain stuck between concerns over the dire consequences for demand should the US economy be faltering and the more optimistic view of a weaker US economy inevitably leading to further quantitative easing,” Ground said.

In Houston, analysts at Raymond James & Associates Inc. said, “Despite recent oil price strength, fundamentals suggest oil prices are still poised for a dive. While the potential for an Iranian conflict and government stimulus speculation have supported near-term oil prices, we still believe oil market fundamentals are going to dramatically deteriorate over the next 6 months or so. After tweaking our oil supply-demand numbers, we remain convinced oil prices will need to fall early next year; therefore, we are maintaining our 2013 oil price deck: $65/bbl for West Texas Intermediate and $80/bbl for Brent. Our bearish oil view is predicated on rising US oil supplies combined with a stagnant global economy that should lead to a glut of oil over the next 12-18 months.”

Despite previous disappointments, many still hope the Fed will do something to stimulate the economy. The German Constitutional Court also is expected to rule Sept. 12 as to whether Germany can legally participate in the financial bailout of other European countries to preserve the euro. Speculation on both events helped buoy markets in early trading Sept. 11 despite an announcement by Moody's Investors Service that it likely will downgrade the US government’s debt rating by at least one notch if Congress can’t reach a compromise soon in budget negotiations. Failure for Congress to reach agreement will automatically trigger $1.2 trillion in tax increases and spending cuts that some say will trigger another recession and increase unemployment.

Last year, Moody’s initiated a negative outlook for the US debt rating during congressional budget conflict that almost put the government in default. The congressional dispute at that time also prompted Standard & Poor's to reduce its AAA rating for US government bonds while Fitch Ratings threatened a potential downgrade. The stock market dropped when Moody’s issued its negative evaluation in 2011, but major market indexes were modestly higher immediately after its latest announcement.

Meanwhile, the US Department of Commerce reported US exports to Europe fell 11.7%. Total US exports were down 1% to $183.3 billion due to reduced sales of autos, telecom equipment, and heavy machinery.

The US Department of Labor said US job openings dropped to a seasonally adjusted 3.67 million in July from 3.72 million in June, indicating US hiring may remain weak for months. The Associated Press reported 12.8 million people were unemployed in July “meaning 3.5 people were competing for each open position.”

In other news, the US Bureau of Safety and Environmental Enforcement said at midday Sept. 10, workers had not yet returned to 2 of the 596 manned platforms and 1 of the 76 rigs in the Gulf of Mexico, most of which were evacuated ahead of Hurricane Isaac. Government officials said 7.98% of daily oil production and 6.11% of daily natural gas product from federal leases in the gulf remain shut in.

Energy prices

The October contract for benchmark US sweet, light crudes rose 12¢ to $96.54/bbl Sept. 10 on the New York Mercantile Exchange. The November contract advanced 13¢ to $96.88/bbl. On the US spot market, WTI at Cushing, Okla., matched the front-month crude futures contract, up 12¢ to $96.54/bbl.

Heating oil for October delivery increased 1.79¢ to $3.17/gal on NYMEX. Reformulated stock for oxygenate blending for the same month inched up 0.44¢ but closed essentially unchanged at a rounded $3.02/gal.

The October natural gas contract regained 13¢ to $2.81/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., continued to fall, down 5.5¢ to $2.68/MMbtu.

In London, the October IPE contract for North Sea Brent gained 56¢ to $114.81/bbl. Gas oil for September increased $2.75 to $988.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes rebound by 77¢ to $112.32/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

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