MARKET WATCH: Cold weather predictions push up gas price

Crude oil futures prices continued to make modest gains while the front-month natural gas contract maintained a five-session rally, escalating 5% Oct. 1 in the New York market on forecasts for cold weather in the central US in coming weeks.

In Houston, analysts at Raymond James & Associates Inc. reported a “rosier” economic outlook with the US Institute for Supply Management (ISM) manufacturing index rising faster than expected, driving broader markets upward. Energy indices also improved with the Oil Service Index up 0.1% and the SIG Oil Exploration & Production Index posting a solid 1.1% gain.

Marc Ground at Standard New York Securities Inc., the Standard Bank Group, said, “Up until the release of the US ISM manufacturing numbers, oil markets benefited from the euro gaining ground against the dollar. The morning’s Euro-zone PMI readings, although only marginally better than expectations, gave market sentiment a boost. However, once the much better-than-expected US data came out (51.5 compared to a consensus of 49.7), after an initial rally we saw crude oil prices promptly fall and entered a downward trend.”

Despite initial reaction to “the obviously positive implications for demand,” Ground said, investors “appeared to switch focus to the possibility that this might weaken the case for extended monetary accommodation” from the US Federal Reserve Bank. He said, “The fact that precious metals (the main beneficiaries of any extensions of central bank liquidity) acted in similar fashion strengthens this assertion. It would appear that it is a consideration of monetary accommodation, rather than demand-supply fundamentals, that is keeping crude oil prices buoyant.”

Ground said, “This, coupled with a positive (or at the very least benign) supply outlook and the extreme length in non-commercial contracts…leaves the market vulnerable to downside. We do, however, contend that any downside will be lessened by the Fed’s promise of liquidity and ongoing geopolitical risks (in particular Iran).”

Meanwhile, Spain is expected to submit a bailout request this week, but Germany is advocating delay in funding that request. “In all likelihood, it seems that Spain might not actually get a full bailout but will instead get aid through the sort of ‘bailout-lite’ facility, which is called the Enhanced Conditions Credit line. Such a move would most likely lift the euro and, via dollar weakness, crude oil.” However, he cautioned the euro likely will strengthen only when Spain makes its request “and not on any anticipation of a request.”

Energy prices

The November and December contracts for benchmark US sweet, light crudes increased 29¢ each to $92.48/bbl and $92.85/bbl, respectively, Oct. 1 on the New York Mercantile Exchange. Once rare, matching price movements for the two front futures contracts have occurred more frequently in recent months. On the US spot market, West Texas Intermediate at Cushing, Okla., maintained its lockstep with the November NYMEX contract, up 29¢ to $92.48/bbl.

However, the new front-month November contract for heating oil dropped 2.34¢ to $3.14/gal on NYMEX. Reformulated stock for oxygenate blending for the same month was unchanged at $2.92/gal.

The November natural gas contract escalated 16¢ to $3.48/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., climbed 13.4¢ to $3.19/MMbtu.

In London, the November IPE contract for North Sea Brent lost 20¢ to $112.19/bbl. Gas oil for October increased $1.75 to $982.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes decreased 37¢ to $109.31/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Obama’s proposed fiscal 2016 budget recycles oil tax increases

02/02/2015 US President Barack Obama has proposed his federal budget for fiscal 2016 that he said was designed to help a beleaguered middle class take advanta...

MOL absorbs Eni’s Romanian retail assets

02/02/2015

MOL Group, Budapest, has completed the acquisition of Eni Romania, including 42 service stations to be rebranded under the MOL name.

CNOOC subsidiary inks deal for grassroots refinery

02/02/2015 Hebei Zhongjie Petrochemical Group Co. Ltd., a subsidiary of China National Offshore Oil Corp. (CNOOC), has entered into a $700 million agreement w...

Pessimism mounts over UK offshore industry

02/02/2015

Pessimism about the UK offshore oil and gas industry is gaining momentum.

EnLink agrees to purchase Coronado Midstream for $600 million

02/02/2015 EnLink Midstream has agreed to acquire Coronado Midstream Holdings LLC, which owns natural gas gathering and processing facilities in the Permian b...

Antero trimming, delaying Marcellus drilling

02/02/2015 Antero Resources Corp., Denver, has announced a $1.8 billion budget for 2015, which is down 41% from 2014. The independent said it plans to defer c...

Woodside gets NEB approval for British Columbia LNG exports

02/02/2015 Woodside Energy Holdings Pty. Ltd. has received approval from Canada’s National Energy Board on its application for a 25-year natural gas export li...

Syncrude sees additional $260-400 million in possible budget cuts

02/02/2015 The estimate for capital expenditures has also been reduced to $451 million net to COS, which includes $104 million of remaining expenditures on ma...

Kerry expects to receive other agencies’ Keystone XL reports soon

02/02/2015 US Sec. of State John F. Kerry said he expects to receive other federal agencies and departments’ reports soon on the proposed Keystone XL crude oi...
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