MARKET WATCH: Crude, natural gas prices climb

The front-month crude contract inched up 0.2%, Dec. 3 in the New York market despite a decline in the stock market following an unexpected contraction in the US Purchasing Managers Index (PMI) in November. The front-month natural gas contract was up 0.8% on forecasts of cooler weather.

“While the manufacturing data in the US was poor, its Chinese counterpart was in better shape, expanding for the first time in 13 months,” said analysts in the Houston office of Raymond James & Associates Inc., citing the Hong Kong & Shanghai Banking Corp. Ltd. (HSBC) Flash Purchasing Manager Index, The Oil Service Index and the SIG Oil Exploration & Production Index dropped 0.3% and 0.2%, respectively.

“On the surface, the headline numbers [of the US and the Chinese PMIs] appear to paint a different picture for the two economies and their implied commodity demand,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “Pessimism over the US is obvious; however, we would caution about getting too optimistic about China and the future of commodity demand from that country.”

He said, “China’s official PMI for manufacturing increased from 50.2 in October to 50.6, the strongest reading since April, and marking a second month of expansion, albeit relatively anemic. Subcomponents of the index show domestic demand has stabilized, although it remains fragile. Of particular encouragement were new export orders, which rose above the 50 threshold for the first time since May. This was corroborated by the overall HSBC PMI (weighted towards smaller export-orientated firms), which also pushed above 50. Indeed, the export subcomponent of the HSBC index also grew impressively from 46.7 in October to 52.4 in November.”

Although the Chinese economy apparently is recovering or at least stabilizing, not all sectors are progressing equally. Ground said, “While exports and manufacturing are improving, these sectors constitute a relatively small portion of China’s total commodity demand. Key for stronger commodity demand growth remains the construction sector (especially residential and commercial construction). While we continue to see growth in this sector, we struggle to see construction growing at the same rate it did between 2009 and 2012 anytime soon. As a result, we may not see physical buying activity in commodities with large exposure to construction (the bulk of overall Chinese commodity demand in the past) pick up substantially, even if economic growth in China improves.”

US manufacturing activity dipped below the 50 threshold in November to 49.5 after 2 months of moderate expansion. “Some of the blame for the dip can be placed on the effect of Hurricane Sandy,” Ground said. “However, uncertainty over the fiscal cliff is also a contributing factor. We saw in last week’s downward revisions of US personal consumption and business investment numbers that the US economy remains fragile, with the uncertainty surrounding the fiscal cliff appearing to have weighed on consumer and business confidence in the third quarter already. This drag on the US economy will no doubt have intensified in the fourth quarter.”

Among commodities, a fragile US economy will have the greatest impact on crude. “However, the indirect effect on China’s nascent improvement in exports and manufacturing could also have negative implications for commodity demand, especially in light of a Euro-zone economy that will most likely remain weak in 2013,” said Ground.

Energy prices

The January contract for benchmark US sweet, light crudes rose 18¢ to $89.09/bbl Dec. 3 on the New York Mercantile Exchange. The February contract increased 20¢ to $89.69/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 18¢ to $89.09/bbl.

The new January front-month heating oil contract, however, dipped 0.45¢ to $3.06/gal on NYMEX. Reformulated stock for oxygenate blending for the same month slipped 0.38¢ to $2.73/gal.

The January natural gas contract gained 3¢ to $3.59/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., lost 4.4¢ to $3.44/MMbtu.

In London, the January IPE contract for North Sea Brent declined 31¢ to $110.92/bbl. Gas oil for December decreased 50¢ to $949.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was down 15¢ to $108.44/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

BOEM publishes second final SEIS for 2008 Chukchi Sea lease sale

02/13/2015 The US Bureau of Ocean Energy Management published a fresh supplemental environmental impact statement for a Chukchi Sea federal oil and gas sale o...

Lukoil lets contract for Uzbekistan gas processing plant

02/13/2015 Russia’s OAO Lukoil has let a contract to a consortium headed by South Korea’s Hyundai Engineering Co. Ltd., Seoul, for the construction of its lon...

Horn Petroleum to reduce Puntland exploration program

02/13/2015 Horn Petroleum Corp., Vancouver, BC, will reduce its presence in Bosaso, Puntland (Somalia), and will “refrain from any operational activity and as...

Birol named to IEA executive director post

02/13/2015 The International Energy Agency’s governing board confirmed the appointment of Fatih Birol as the agency’s next executive director. Birol succeeds ...

Partners submit Johan Sverdrup development plan

02/13/2015 Partners Statoil ASA, Lundin Petroleum AB, Petoro, Det Norske Oljeselskap ASA, and Maersk Oil have submitted a plan for development and operation (...

MARKET WATCH: NYMEX crude oil price jumps more than $2/bbl

02/13/2015 Crude oil prices on the New York market jumped by more than $2/bbl Feb. 12 to settle above $51/bbl, which analysts attributed to more oil and gas c...

Apache’s 2015 capital budget less than half of last year’s $8.5 billion

02/12/2015 Apache Corp., Houston, plans a capital budget of $3.6-4 billion in 2015, with $2.1-2.3 billion directed toward onshore North America and $1.5-1.7 b...

Alaska LNG project partners file resource reports with FERC

02/12/2015 A series of draft environmental and socioeconomic reports for the Alaska LNG project have been submitted to the US Federal Energy Regulatory Commis...

Total reduces budget by 10% to $23-24 billion

02/12/2015 Total SA plans to lower its organic investments to $23-24 billion in 2015 from $26.4 billion in 2014 by reducing spending in brownfield development...
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


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