MARKET WATCH: Pessimistic indicators undercut energy prices

Energy commodity prices were still falling Dec. 7 with front-month crude down 3.4% for the week and natural gas essentially flat in the New York market as political stalemate over the fiscal federal budget continued.

“Investors have felt the pressure the last few weeks in the absence of an imminent deal to avoid automatic spending cuts. Equities were moved by fleeting optimism of a deal in the second half of last week, ending flat to modestly up on the week,” said analysts in the Houston office of Raymond James & Associates Inc.

The latest Commodity Futures Trading Commission numbers show net speculative length for benchmark crude in the New York market increased 13.1 million bbl—“an overly confident move, in our opinion,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. Nevertheless, he said, “The futures market looked decidedly bullish, with 6.6 million bbl added to speculative longs and an equal amount unwound from short positions. Length seems excessive, especially amid the uncertainty of the fiscal cliff and the possible deleterious effects on the US economy. This explains the acute sensitivity of late that oil market participants seem to have to any news or data release that might suggest a deterioration in the global (in particular the US) economy.”

Ground said, “This ultra-sensitivity was evident in Friday’s reaction to better-than-expected non-farm payrolls and then the underwhelming US consumer confidence reading. While the payrolls data was encouraging (also showing no discernible effect of Hurricane Sandy), the University of Michigan consumer confidence index erased the gains of the past 3 months, the clearest indication we’ve had as yet of the negative impact the fiscal cliff saga is having on households. With a resolution of the fiscal cliff most likely, albeit at the 11th hour, this undermining of consumer and business confidence to our mind is already hurting the fragile US economy.”

In other news, Raymond James analysts said, “Despite relatively subdued global product demand, years of economically driven refining capacity shutdowns and run cuts (largely centered in Europe and on the US East Coast) left the global refining picture fairly balanced during the first half of 2012, with the Organization for Economic Cooperation and Development product inventory levels tracking well below 5-year lows. Beginning this past summer, the picture quickly tightened due to a series of unplanned refinery outages (namely US Gulf, West Coast, and Venezuela), combined with a heavy refinery maintenance season (particularly in Europe) altogether driving Atlantic Basin crack spreads to highs not seen since 2005-06. Alas, the onset of winter has brought global crack spreads back down to seasonal norms, and investor focus has now shifted towards the next wave of new projects threatening to tip the refining market towards overcapacity.”

They said, “Once again, a healthy dose of capacity rationalization will be needed in order to stave off overcapacity and support global crack spreads.” Against this cautionary global refining backdrop, however, Raymond James analysts maintain a “positive view on US refining fundamentals, which continue to sit at a huge cost-advantaged position resulting from the disconnect in domestic crude (and natural gas) prices.”

Energy prices

The January contract for benchmark US light, sweet crudes decreased 33¢ to $85.93/bbl Dec. 7 on the New York Mercantile Exchange. The February contract declined 35¢ to $86.50/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 33¢ to $85.93/bbl.

Heating oil for January delivery slipped 2.79¢ to $2.92/gal on NYMEX. Reformulated stock for oxygenate blending for the same month inched up 0.05¢ but closed essentially unchanged at a rounded $2.60/gal.

The January natural gas contract fell 11.5¢ to $3.55/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 4.8¢ to $3.34/MMbtu.

In London, the January IPE contract for North Sea Brent dipped 1¢ to $107.02/bbl. Gas oil for December dropped $7.75 to $905.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was down 89¢ to $104.75/bbl. So far this year the OPEC basket has averaged $109.64/bbl.

Contact Sam Fletcher at

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

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

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
Available Webcasts

Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

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.


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


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