MARKET WATCH: Oil prices decline as joy over budget agreement wanes

Oil prices slumped and natural gas continued its fall Jan. 3 as euphoria over the US budget agreement faded.

“Positive sentiment helped keep oil markets buoyant in the early part of the day. West Texas Intermediate achieved an intraday high of around $93.20/bbl, while Brent was just off $112.40/bbl,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “However, this all changed after the release of the Federal Open Market Committee’s minutes [of its Dec. 11-12 meeting], which seriously dented the market’s confidence in continued monetary easing [by the US Federal Reserve System].”

Prices for both West Texas Intermediate and North Sea Brent immediately dropped, then climbed a little higher but still finished in the red. These losses were extended when Asian markets opened. “Brent moved as low as $111.30/bbl during Asian trading hours,” said Ground. “Trade has been relatively more volatile this morning, although movements are anchored around $111.40/bbl.”

On the other hand, he said, “The drop in crude oil prices was not to the extent of precious metals, which could be owing to increased optimism over the strength of the US economy. While the FOMC did not really reveal any change in their economic outlook (the recovery remains challenging), perhaps participants reason that the discussions around ending quantitative easing imply that the economy must be looking better. We feel that this is premature.”

US inventories

The Energy Information Administration said Jan. 4 commercial US inventories of crude fell 11.1 million bbl to 359.9 million bbl in the week ended Dec. 28, the last full week reported for 2012. The Wall Street consensus was for a much smaller decrease of 1 million bbl. US crude stocks remain well above average, however. Gasoline inventories increased 2.6 million bbl to 225.7 million bbl that same week, exceeding the market’s outlook for a gain of 2.2 million bbl. Finished gasoline stocks decreased while blending components increased. Distillate fuel inventories jumped 4.6 million bbl to 124 million bbl, outstripping the 1.3 million bbl gain analysts expected.

Imports of crude were down 931,000 b/d to 7.1 million b/d last week. In the 4 weeks through Dec. 28, crude imports averaged 8 million b/d, down 475,000 b/d from the comparable period in 2011. Gasoline imports last week averaged 487,000 b/d while distillate fuel imports averaged 108,000 b/d.

The input of oil into US refineries inched up 13,000 b/d to 15.3 million b/d last week, with units operating at 90.4% of capacity. However, gasoline production decreased to 8.9 million b/d, and distillate fuel production declined to 4.9 million b/d.

EIA also reported the withdrawal of 135 bcf of natural gas from US underground storage, surpassing Wall Street’s consensus for 130 bcf. That left 3.517 tcf of working gas in storage at the end of the year, up 23 bcf from the comparable period a year ago and 389 bcf above the 5-year average. Publication of EIA’s weekly reports was delayed because of the New Year holiday.

Energy prices

The February contract for benchmark US light, sweet crudes declined 20¢ to $92.92/bbl Jan. 3 on the New York Mercantile Exchange. The March contract decreased 21¢ to $93.34/bbl. On the US spot market, WTI at Cushing, Okla., followed the front-month futures contract down 20¢ to $92.92/bbl.

Heating oil for February delivery lost 2.12¢ to $3.03/gal on NYMEX. Reformulated stock for oxygenate blending for the same month inched up 0.26¢ but closed essentially unchanged at a rounded $2.80/gal.

The February natural gas contract continued falling, down 3.5¢ to $3.20/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 8.6¢ to $3.19/MMbtu.

In London, the February IPE contract for North Sea Brent gave back 33¢ to $112.14/bbl. Gas oil for January was down $6.75 to $935.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up 19¢ to $109.15/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

Definitive Guide to Cybersecurity for the Oil & Gas Industry

In the Oil and Gas industry, there is no single adversary and no single threat to the information tech...

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
Available Webcasts

Better Data, Better Analytics, Better Decisions

When Tue, Oct 27, 2015

The Oil & Gas industry has large amounts of data stored in multiple systems which are purpose built for certain tasks. However, good decisions require insights based upon the data in all of these systems. These systems in turn do not talk to each other. So the process of analyzing data, gaining insights, and making decisions is a slow one and often a flawed one. Good decisions require accurate analytics and accurate analytics require superior/sustainable data quality and governance. This webinar focuses on:

  • The importance of data quality and governance
  • How technological advances are making data quality and governance sustainable in order to get the accurate analytics to make solid decisions.

Please join us for this webcast sponsored by Seven Lakes Technologies and Noah Consulting.


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.


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