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

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