MARKET WATCH: Crude price down marginally on bearish inventory report

Energy markets generally declined Jan. 9 with front-month crude down a marginal 0.1% following a bearish US inventory report. Natural gas continued its decline, falling 3.3% in the New York market.

However, crude prices strengthened in early trading Jan. 10 with benchmark US crudes at the highest level since September and North Sea Brent at its highest since October, said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “The impetus for this strong rally is largely owed to strong and much-better-than-expected Chinese trade numbers, with some dollar weakness adding some extra support,” he said.

After showing no growth in November, China’s total imports climbed 6% in December from the same period in 2012, exceeding market expectations of a 3.5% gain. “However, it was the resurgence in exports (14.1% year-over-year compared with expectations of 5%) that has really bolstered confidence in the Chinese economy,” Ground said. “Net imports of crude oil were up 1.5% year-over-year in December. On an annual basis, net crude oil imports were 9.2% higher in 2012 than in 2011, an improvement on the 4.7% year-over-year growth seen from 2010 to 2011.”

Meanwhile, Saudi Arabia reduced its oil production 465,000 b/d in December—“the largest monthly cut since November 2008,” said analysts in the Houston office of Raymond James & Associates Inc. They noted Saudi Arabia has reduced production more than 700,000 b/d over the last 2 months, with output now down to roughly 9 million b/d from a peak rate of 10.1 million b/d in June. They said, “Saudi Arabia is surprisingly being proactive to what we believe is an oversupplied oil market.”

US inventories

The Energy Information Administration reported Jan. 10 the withdrawal of 201 bcf of natural gas from US underground storage in the week ended Jan. 4, surpassing Wall Street’s consensus for an outtake of 191 bcf. That left 3.316 tcf of working gas in storage, down 88 bcf from the comparable period in 2012 but 320 bcf above the 5-year average.

EIA earlier reported commercial US crude inventories increased 1.3 million bbl to 361.3 million bbl in that same week, less than Wall Street’s consensus for a 2 million bbl gain. However, gasoline stocks jumped 7.4 million bbl to 233.1 million bbl in that period, far exceeding the expected 2.5 million bbl gain. Finished gasoline inventories decreased while blending components increased. Distillate fuel stocks escalated 6.8 million bbl to 130.7 million bbl, far above the 1.9 million bbl increase the market anticipated (OGJ Online, Jan. 9, 2013).

Although crude stocks rose less than expected, the aggregate of crude, gasoline, and distillates “soared by 15.5 million” compared with the predicted build of 6.4 million bbl, Raymond James analysts said, “Though product crack spreads (particularly gasoline) have succumbed to seasonal weakness, refiners continue to operate at high utilization rates (89.1% last week) given a Brent-West Texas Intermediate spread of $18/bbl and regional crude differentials that continue to drive healthy margins. Cushing, Okla., inventories increased yet again to 50.1 million bbl (another record high), and total days of supply climbed to 49.7 days (1.4 days above year-ago levels and also a multiyear high).”

Energy prices

The February contract for benchmark US sweet, light crudes dipped 5¢ to $93.10/bbl Jan. 9 on the New York Mercantile Exchange. The March contract decreased 4¢ to $93.56/bbl. On the US spot market, WTI at Cushing was down 5¢ to $93.10/bbl in step with the front-month futures contract.

Heating oil for February delivery continued to rise, up 1.14¢ to $3.07/gal on NYMEX. Reformulated stock for oxygenate blending for the same month lost 1.55¢ to $2.78/gal.

The February natural gas contract continued its losing trend, falling 10.5¢ to $3.11/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 9.3¢ to $3.12/MMbtu.

In London, the February IPE contract for Brent retreated 18¢ to $111.76/bbl. Gas oil for January gained $3.25 to $948.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 29¢ to $109.01/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

EPA proposes voluntary methane reduction program for gas industry

07/24/2015 The US Environmental Protection Agency proposed a voluntary methane reduction program for the natural gas industry that would allow companies to ma...

Petrobras workers stage 24-hr strike

07/24/2015 Workers at beleaguered Petroleo Brasileiro SA (Petrobras) staged a 24-hr strike across Brazil to protest plans by the state-owned company to liquid...

MARKET WATCH: Oil futures hover below $49/bbl

07/24/2015 Light, sweet crude oil futures prices settled under $49/bbl July 23 on the New York market, which means US prices have slid more than 20% since the...

EQT reports high IP from Utica dry gas well

07/24/2015 EQT Corp., Pittsburgh, said a deep, dry gas Utica well averaged 72.9 MMcfd with an average flowing casing pressure of 8,641 psi during a 24-hr deli...

Separate Murkowski bill addresses crude exports, OCS revenue sharing

07/24/2015 US Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-Alas.) introduced legislation that would end the ban on US crude oil expor...

OGUK updates guidelines for well abandonments

07/23/2015

Oil & Gas UK has released updated guidelines for abandonment of wells, including cost estimates.

MARKET WATCH: Oil futures plunge below $50/bbl

07/23/2015

Light, sweet crude oil futures prices plunged lower to settle below $50/bbl on the New York market on July 22.

Cornyn calls for more US energy exports in wake of Iran deal

07/23/2015 US Senate Majority Whip John Cornyn (R-Tex.) said it would be geopolitically, economically, and strategically absurd for the US to maintain outmode...

Post-sanctions Iran initially won’t shake markets up, executive says

07/22/2015 Iran’s resumption of oil and gas exports, once sanctions are lifted under the recently negotiated nuclear limits agreement, probably won’t flood gl...
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