MARKET WATCH: Oil prices rise in volatile markets

Oil prices fluctuated through “a rollercoaster ride” Dec. 12 before posting gains at closing as benchmark crudes registered “the best performance in weeks” in London and New York markets, with North Sea Brent faring better than West Texas Intermediate.

Prices trended up in anticipation of an expanded quantitative easing program announced by Federal Reserve Bank officials later in the day and despite a bearish government report of a bigger-than-expected build in US oil inventories during the past week. “The market was unsettled by the strong builds for a second consecutive week in gasoline and distillate stocks,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.

“While the Fed did announce that the expiring Operation Twist would be replaced by outright bond purchases of $45 billion/month, this had been largely anticipated, leaving markets nothing new to sustain their upward trajectory,” Ground reported. “With the announcement out of the way, considerations turned once again to the fiscal cliff, which saw markets drop and continues to lend prices a downward bias this morning.”

As expected, the brief Nov. 12 meeting of ministers of the Organization of Petroleum Exporting Countries in Vienna produced no surprises and no changes to production quotas (OGJ Online, Dec. 12, 2012). “Oil traders were encouraged by OPEC, which reported production from the 12 member countries has slid to an 11-month low of 30.8 million b/d,” said analysts in the Houston office of Raymond James & Associates Inc. “That's lowball compared with other estimates, though even if accurate, it's still above the official quota (not that anybody cares about quotas these days, least of all OPEC members themselves).”

Reports on US economic indicators Dec. 13 were of the half-full-half-empty sort, depending on one’s outlook. The US Department of Labor said new applications for unemployment benefits last week fell for a fourth consecutive time, down 29,000 to a seasonally adjusted 343,000—the lowest total applications in 2 months and the second lowest for this year. Yet there were 5.6 million US residents receiving unemployment benefits in the week ended Nov. 24, the latest period for which data are available, an increase of 700,000 from the previous week.

New applications for unemployment benefits spiked 5 weeks ago in the wake of Hurricane Sandy, but the storm had little effect on November hiring with 146,000 new jobs reported last month compared with an average monthly gain of 150,000 this year. US unemployment fell to a 4-year low of 7.7% from 7.9% in October, primarily because more unemployed workers have exhausted their benefits and given up looking for jobs. December hiring will include part-time and short-term jobs related to the holiday season, but analysts expect some companies will curtail hiring in the face of deadlocked negotiations on the federal budget and the “fiscal cliff” threat at the start of the new year.

Meanwhile, the US Department of Commerce reported US retail sales increased 0.3% in November, the biggest gain in 13 months and offsetting a 0.3% decline in October. However, increased retail sales in November were largely the result of Hurricane Sandy, with auto sales up 1.5% to replace damaged vehicles and home improvement store sales up 1.6% as storm victims rebuild.

The start of holiday shopping added to November’s increased spending with online shopping jumping 3%, the biggest increase in 13 months. Department store sales fell, however, even at the “big box” chain outlets.

US inventories

The Energy Information Administration reported the injection of 2 bcf of natural gas into US underground storage in the week ended Dec. 7, less than Wall Street’s consensus for a 3 bcf addition. That raised working gas in storage to 3.806 tcf, which is 48 bcf more than in the comparable period in 2011 and 283 bcf above the 5-year average.

EIA earlier reported commercial US crude inventories increased by 800,000 bbl to 372.6 million bbl in the same week, a total well above average for the time of year. Gasoline stocks jumped 5 million bbl to 217.1 million bbl, with increases in both finished gasoline and blending components. Distillate fuel inventories escalated 3 million bbl to 118.1 million bbl, still well below average (OGJ Online, Dec. 12, 2012).

Raymond James analysts said the oil inventory update was bearish with a larger-than-expected build in gasoline and distillate stocks compounded by an unexpected build in crude. The "Big Three" inventories—crude, gasoline, and distillate fuel—had a total increase of 8.8 million bbl, driven by the surge in gasoline stocks again.

Energy prices

The January contract for benchmark US sweet, light crudes rose 98¢ to $86.77/bbl Dec. 13 on the New York Mercantile Exchange. The February contract climbed 99¢ to $87.31/bbl. On the US spot market, WTI at Cushing, Okla., accompanied the front-month futures contract, up 98¢ to $86.77/bbl.

Heating oil for January delivery bumped up 3.98¢ to $2.97/gal on NYMEX. Reformulated stock for oxygenate blending for the same month increased 3.6¢ to $2.65/gal.

The January natural gas contract continued its decline, down 3¢ to $3.38/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 4.4¢ to $3.33/MMbtu.

In London, the January IPE contract for Brent was up $1.49 to $109.50/bbl. Gas oil for December was unchanged at $903.50/tonne, while the January contract escalated $15.50 to $923/tonne.

The average price for OPEC’s basket of 12 benchmark crudes increased $1.03 to $105.83/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Statoil reduces capital budget by $2 billion following 4Q losses

02/06/2015 Statoil ASA has reduced its organic capital expenditure to $18 billion in 2015 from $20 billion in 2014. The move comes on the heels of a fourth qu...

Chinese regulators approve Sinopec’s plan for grassroots refinery

02/06/2015 China’s National Development and Reform Commission (NDRC) has approved Sinopec Beijing Yanshan Petrochemical Co. Ltd., a subsidiary of China Nation...

BOEM schedules public meetings about draft proposed 5-year OCS plan

02/06/2015 The US Bureau of Ocean Energy Management will hold the first of 20 public meetings in Washington on Feb. 9 to receive public comments on potential ...

Union strike ongoing at US refineries as negotiations continue

02/06/2015 A strike by union workers at nine US refining and petrochemical production plants remains under way as the United Steelworkers Union (USW) continue...

NCOC lets $1.8-billion pipeline contract for Kashagan field

02/06/2015 North Caspian Operating Co. (NCOC) has let a $1.8-billion engineering and construction contract to ERSAI Caspian Contractor LLC, a subsidiary of Sa...

AOPL releases 2015 safety performance and strategic planning report

02/06/2015 The Association of Oil Pipe Lines is committed to further improvements despite a 99.99% safe petroleum liquids delivery rate, AOPL Pres. and Chief ...

MARKET WATCH: NYMEX oil price bounces back up somewhat

02/06/2015 Crude oil prices on the New York market bounced up $2/bbl to settle slightly above $50/bbl Feb. 5. The positive momentum continued during early Jan...

Congressional Republicans renew bid to halt sue-and-settle maneuvers

02/05/2015 Calling it an affront to regulatory accountability that results in unchecked compliance burdens, US Sen. Charles E. Grassley (R-Iowa) and US Rep. D...

Oil-price collapse may aggravate producing nations’ other problems

02/05/2015 The recent global crude-oil price plunge could be aggravating underlying problems in Mexico, Colombia, and other Western Hemisphere producing natio...
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