MARKET WATCH: Oil prices continue climbing

Oil prices continued to rally when trading resumed Jan 22 after the Martin Luther King Jr. holiday in the US. The market was “emboldened by the promise of monetary stimulus in Japan and its possible attendant positive effect on other major oil consumers in the region,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.

Ground reported, “Support for prices continues as participants grow optimistic that US politicians will pass a resolution to push the debt limit ceiling forward to May 19. The White House has also said that this resolution would be signed into law by [President Barack] Obama should it pass Congress. While this should lift markets in the short term, it would merely be a kicking of the can down the road. So whereas US fiscal uncertainty and risk would have been concentrated in the first quarter, some of this will move to second quarter.”

He noted fiscal uncertainty remains with the sequester spending cuts and budget appropriations expiry still ahead in March. “Therefore, there is still considerable potential for damage to investor and consumer confidence, and ultimately growth over the next 6 months,” Ground said.

Analysts in the Houston office of Raymond James & Associates Inc. reported, “Investors were focused on the pragmatic, with German investor confidence surging and Spanish and Italian government borrowing costs close to 12-month lows. Crude futures rose 0.7% while natural gas remained flat.”

Analysts at KBC Market Services, a division of KBC Process Technology Ltd. in Surrey, UK, said gasoline cracks in the Singapore market weakened sharply during the first 2 weeks of January, with the crack for 95 octane gasoline dropping from just above $16/bbl at the beginning of January to a low of $12/bbl on Jan. 14. “Gasoline cracks weakened on higher supplies due in part to unusual movements from the US, with more shipments scheduled to arrive in Asia from the world’s top gasoline consumer for the second straight month in January as the country struggled with excess stocks,” they said.

KBC analysts expect some support for gasoline cracks over the next couple of months due to forthcoming heavy refinery maintenance, particularly with planned turnarounds in South Korea. In addition, they said, “Taiwan’s Formosa plans to shut down a gasoline-making unit for maintenance starting in March for 3 months. However, several major refinery startups in Asia are anticipated for early 2013.” KBC expects gasoline cracks to ease to around $11.50/bbl by March.

Analysts with the PIRA Energy Group in New York expect declining US imports to adversely affect Atlantic Basin crude balances. “North American production is growing rapidly, and US offshore imports will continue to decline,” they said. They expect the price spread between West Texas Intermediate and North Sea Brent to narrow steadily in first quarter “and then more sharply midyear as Cushing, Okla., inventories are drained. US Gulf Coast light crude differentials will be choppy but will remain connected with limited discounts vs. international levels.”

They said, “Oil prices have continued to trade in a relatively tight range. Asian crude runs will decline in January, but demand declines for gasoline, gas oil, and fuel oil will outpace run declines. This suggests Asian product stocks will build.”

Energy prices

The February contract for benchmark US light, sweet crudes gained 75¢ to $96.24/bbl Jan. 22 on the New York Mercantile Exchange, its highest closing since October. The March contract rose 74¢ to $96.68/bbl. On the US spot market, WTI at Cushing was up 75¢ to $96.24/bbl.

Heating oil for February delivery increased 4.7¢ to $3.07/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 6.15¢ to $2.83/gal.

The February natural gas contract climbed 6.4¢ to $3.56/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated 7.3¢ to $3.58/MMbtu.

In London, the March IPE contract for North Sea Brent was up 71¢ to $112.42/bbl. Gas oil for February gained $5.25 to $969.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 16¢ to $109.48/bbl. OPEC’s Vienna office will be closed Jan. 24.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Deloitte studies oil supply growth for 2015-16

02/04/2015 A Deloitte MarketPoint analysis suggested large-field projects, each producing more than 25,000 b/d, could bring on 1.835 million b/d in oil supply...

Oil, gas infrastructure investments essential, House panel told

02/04/2015 Investments in oil and gas transportation and storage should move ahead because they are essential in continuing the US economic recovery and North...

Petrobras CEO, five other senior executives resign

02/04/2015 Maria das Gracas Foster, chief executive officer of Petroleo Brasileiro SA (Petrobras) since 2012, has resigned along with five other senior execut...

MARKET WATCH: NYMEX crude oil prices reach 2015 high

02/04/2015 Crude oil prices surged more than $3/bbl on the New York market Feb. 3, closing at the highest level so far this year, but some analysts believe th...

Chevron unit farms into Mauritania offshore blocks

02/04/2015 Chevron Mauritania Exploration Ltd., a wholly owned subsidiary of Chevron Corp., has agreed to acquire 30% nonoperated working interest in Blocks C...

Saetre named Statoil president, CEO

02/04/2015

Eldar Saetre has been named president and chief executive officer of Statoil, succeeding Helge Lund, who resigned in October.

BG’s 2015 budget ‘significantly lower than 2014’

02/03/2015 BG Group plans capital expenditures on a cash basis of $6-7 billion in 2015, a range it says is “significantly lower than 2014” due to “a lower oil...

BP trims capital budget by $4-6 billion

02/03/2015 BP PLC plans an organic capital expenditure of $20 billion in 2015, down from the previous guidance $24-26 billion. Total organic capital expenditu...

EPA suggests DOS reconsider Keystone XL climate impact conclusions

02/03/2015 The US Department of State might want to reconsider its conclusions regarding potential climate impacts from the proposed Keystone XL crude oil pip...
White Papers

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

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...
Available Webcasts

On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


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


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