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

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

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
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

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