MARKET WATCH: Oil prices rise, natural gas declines amid mixed market signals

Prices for crude oil posted modest gains but those for natural gas declined Sept. 6 as markets continued to assess mixed economic signals.

The US Department of Labor reported 96,000 new jobs in August, fewer than expected. It also said US unemployment dropped from 8.3% in July to 8.1% last month. But the decline was triggered primarily by the growing number of workers who have given up looking for nonexistent jobs and who therefore are not included in unemployment figures. The US work force is now at its lowest level in 31 years, officials said.

The government revised earlier estimates of new jobs in June and July down by 41,000 openings, primarily due to the termination of 39,000 federal, state, and local government jobs in those 2 months. “In previous recoveries, governments have typically added jobs, not shed them,” the Associated Press reported.

Moreover, officials said average hourly pay was down and manufacturers eliminated the largest number of jobs in 2 years. Optimists hope these latest signs of a stalled economic recovery will prompt new economic stimulus by Federal Reserve officials at their scheduled meeting next week.

Meanwhile, the government-bond purchasing plan revealed by European Central Bank Pres. Mario Draghi continued to stimulate financial markets overseas (OGJ Online, Sept. 6, 2012). Since that announcement, the euro has steadily strengthened against the dollar. Investors expect financially troubled Spain will request aid under that new program soon.

Analysts in the Houston office of Raymond James & Associates Inc. noted the price spread between Brent and West Texas Intermediate recently has contracted as the outlook for North Sea oil loadings has improved. “According to media reports, the October loading program for North Sea Brent is expected to increase to 135,000 b/d from 100,000 b/d in September,” they said. “North Sea supply has been weak this summer, keeping the Brent contract in steep backwardation. While we acknowledge that a seasonal pick up in North Sea supply could put further downward pressure on the WTI-Brent spread in the near-term, we continue to believe that persistent surge of US oil supply and the resulting logistics bottlenecks will keep the spread wider ($15/bbl) for longer (several years).”

In other news, the Bureau of Safety and Environmental Enforcement said workers had returned to all but 10 of the 596 manned platforms and 1 of the of the 76 rigs in the Gulf of Mexico as of mid-day Sept. 6. Most of those offshore facilities were evacuated ahead of Hurricane Isaac. Government officials reported 42.98% of daily oil production and 21.28% of daily gas production from federal leases in the gulf remain shut in, however. They attributed the slow recovery to storm damage at onshore processing facilities.

US inventories

The Energy Information Administration reported the injection of 28 bcf of natural gas into US underground storage in the week ended Aug. 31, well below Wall Street’s consensus for a 33 bcf addition. That increased working gas in storage to 3.4 tcf, up 395 bcf from the comparable period in 2011 and 329 bcf above the 5-year average.

EIA reported commercial US crude inventories fell 7.4 million bbl to 357.1 million bbl in the same week, out-stripping Wall Street’s expectation of a 5 million bbl drop. Gasoline stocks continued falling, down 2.3 million bbl to 198.9 million bbl, with both finished gasoline and blending components in decline. Analysts were expecting a draw of 3 million bbl. Distillate fuel inventories increased 1 million bbl to 127.1 million bbl vs. market anticipation of a 1.6 million bbl draw but remained below average for the period.

The American Petroleum Institute earlier reported crude stocks fell 7.2 million bbl to 359.3 million bbl in that same week, with gasoline inventories down 2.3 million bbl to 201.8 million bbl. It said distillate fuel stocks dropped 132,000 bbl to 126.4 million bbl (OGJ Online, Sept. 6, 2012).

Energy prices

The October contract for benchmark US light, sweet crudes advanced 17¢ to $95.53/bbl Sept. 6 on the New York Mercantile Exchange. The November contract increased 16¢ to $95.85/bbl. On the US spot market, WTI at Cushing, Okla., followed the front-month futures contract up 17¢ to $95.53/bbl.

Heating oil for October delivery was reported up 2.49¢ to $3.14/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 4.12¢ to $2.99/gal.

The October natural gas contract continued its decline, down 1.9¢ to $2.78/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 3.6¢ to $2.84/MMbtu.

In London, the October IPE contract for North Sea Brent gained 40¢ to $113.49/bbl. Gas oil for September escalated $9.25 to $990.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes lost 55¢ to $111.20/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Shell cuts $15 billion in spending for 2015-17

01/30/2015 Royal Dutch Shell PLC has curtailed more than $15 billion in potential spending over the next 3 years, but is not “not overreacting to current low ...

Victoria extends drilling, fracing ban

01/30/2015 The new Victorian Labor government of premier Daniel Andrews has extended the coal seam gas (CSG) exploration and hydraulic fracturing ban in the s...

Chevron’s $35 billion capital budget down 13% from last year

01/30/2015 Chevron Corp. will allocate $35 billion in its capital and exploratory investment program for 2015, including $4 billion of planned expenditures by...

US Senate passes bill approving Keystone XL pipeline project

01/30/2015 The US Senate has passed a bill approving construction of the proposed Keystone XL crude oil pipeline by a 62-36 vote after 3 weeks of debate. Nine...

Oxy cuts capital budget by a third

01/30/2015 In the midst of falling oil prices, Occidental Petroleum Corp., Houston, expects to reduce its total capital spending for 2015 to $5.8 billion from...

MARKET WATCH: NYMEX natural gas prices drop after storage report

01/30/2015 US natural gas closed at its lowest price in more than 2 years on the New York market Jan. 29 following the government’s weekly gas storage report,...

Pennsylvania governor reinstates state forest drilling moratorium

01/29/2015 Pennsylvania Gov. Tom Wolf (D) signed an executive order fully reinstating a 2010 moratorium on new oil and gas leases in state forests and parks. ...

PwC: Low oil prices might drive surge in restructuring in 2015

01/29/2015 Mergers and acquisitions (M&A) in the oil and gas industry hit 10-year highs in terms of deal value and volume in 2014, according to a report f...

DOE could meet 45-day LNG export decision deadline, Senate panel told

01/29/2015 The US Department of Energy would have no trouble meeting a 45-day deadline to reach a national interest determination for proposed LNG export faci...
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


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