MARKET WATCH: Oil, gas prices tumble amid fear of economic slowdown

Energy prices continued to tumble Oct. 22 despite increased turmoil in the Middle East, with front-month benchmark crude down nearly 2% in New York as fear of a global economic slowdown overcame worry of supply disruptions.

“Natural gas prices fell nearly 5% [in New York] as oversupply fears caused some to perceive the recent rally as overextended,” said analysts in the Houston office of Raymond James & Associates Inc. The Energy Information Administration reported 51 bcf of natural gas injected into US underground storage in the week ended Oct. 12, above Wall Street’s consensus for 47 bcf. This increased working gas in storage to 3.776 tcf, up 181 bcf from the comparable period a year ago and 249 bcf above the 5-year average (OGJ Online, Oct. 18, 2012).

The Oil Service Index and the SIG Oil Exploration & Production Index followed commodities down by 0.5% and 1.6%, respectively. The boarder market also had its ups and downs with the Dow Jones Industrial Average at one point trading “down more than 100 points before staging a furious rally in the final hour to end the day roughly flat,” Raymond James analysts reported. Crude and broader markets were “notably lower” in early trading Oct. 23, but natural gas was on the rise.

“This time it was West Texas Intermediate that was under greater pressure,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “Amid general pessimism over the prospects for the global economy, the restart of the TransCanada Keystone pipeline weighed further on WTI. Another delay in the restart of the Buzzard field in the North Sea, together with Royal Dutch Shell PLC declaring force majeure on its Nigerian Bonny Light and Forcados exports, limited the downside in Brent.”

For now, Ground expects “another slow day for data, with Euro-zone consumer confidence and the Richmond Federal Reserve Bank’s manufacturing index the only noteworthy releases. Unsurprisingly, today’s advance reading of the Euro-zone consumer confidence is expected to remain weak at minus 25.9 for October [the same as September] weighed down by the persistently poor current economic conditions and economic outlook components. A weak reading here could spell euro weakness and consequently weigh on commodity prices.”

Manufacturing activity in the Richmond Fed district is expected to improve marginally. “Consensus is for the index to climb to 5 in October from 4 in the previous month. September’s number showed a negative reading for employment, which was offset by positive readings on the shipments and new orders components. Here too a weaker reading, we believe, would be negative for oil prices, especially WTI, as it might see demand concerns resurface. We believe that the risks for both these releases are tilted towards the downside.”

Energy prices

The November contract for benchmark US sweet, light crudes dropped $1.32 to $88.73/bbl Oct. 22 on the New York Mercantile Exchange. The December contract fell $1.79 to $88.65/bbl. On the US spot market, WTI at Cushing, Okla., followed the front-month futures contract down $1.32 to $88.73/bbl.

Heating oil for November delivery lost 5.78¢ to $3.08/gal on NYMEX. Reformulated stock for oxygenate blending for the same month decreased 4.88¢ to $2.65/gal.

The February natural gas contract plunged 16.5¢ to $3.45/MMbtu on NYMEX, giving back most of its gains from the previous three sessions. On the US spot market, gas at Henry Hub, La., climbed 10¢ to $3.49/MMbtu.

In London, the December IPE contract for North Sea Brent retreated 70¢ to $109.44/bbl. Gas oil for November fell $19.25 to $977.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was down $1.86 to $107.13/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

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

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...
Available Webcasts


Cognitive Solutions for Upstream Oil and Gas

When 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

When 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



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


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


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