MARKET WATCH: Crude prices increase but natural gas trades down

Crude prices increased Feb. 12 with the front-month contract up 0.5% on the New York market after the Group of 7 (G7) finance ministers from the US, UK, France, Germany, Italy, Canada, and Japan agreed to avoid currency manipulation.

That reduced market fears the European Central Bank might try to manipulate the value of the euro, said analysts in the Houston office of Raymond James & Associates Inc. Natural gas futures traded down 1.5%.

“Last night's State of the Union address outlined an expansive agenda, though it did little to bridge the gap between Democrats and Republicans [in] budget debates,” Raymond James analysts reported. They noted President Barack Obama in that address “drew an explicit link between the intensity of recent weather events and climate change, building on his rhetoric from the inaugural address in January. However, it was very slim pickings as far as actual policies go.”

Obama urged Congress to pass carbon legislation but didn't state a preference between cap-and-trade or a carbon tax—“something that, we are quite certain, he knows is not going to happen given the current political balance,” Raymond James analysts said. Obama hinted he would take executive action if Congress does not act but provided no details.

“Elsewhere on the energy front, there was even less substance—not even a hint of such hot-topic issues as the Keystone pipeline or liquefied natural gas exports. Insofar as renewables go, President Obama made his standard pitch for not allowing China and other countries to lead in these industries, but there were no new proposals.”

At Globaldata in London, Matt Jurecky, director of energy research and consulting, said, “With an economy resigned to crude oil prices hovering near $100/bbl and natural gas prices having maintained a sub-$5/MMbtu pattern for over 2 years, President Obama blanked the oil and gas industry in his annual State of the Union address.”

Citing low natural gas prices as the reason for lower energy bills, Obama called for more investment in alternative fuels like wind and solar energy. He also proposed diverting tax revenues from the oil and gas industry to fund transportation fuel alternatives through an Energy Security Trust.

Jurecky noted the oil and gas industry has been central to US job creation over the last decade, shrinking the trade balance and providing increased government revenue. “Growth of the domestic industry has also decoupled the US benchmark for crude prices, West Texas Intermediate, from the more global benchmark, North Sea Brent, reducing the country’s exposure to global geopolitical volatility,” he said.

“An absence of issues” such as fracking regulation, approval of the Keystone XL pipeline, and LNG exports from the president’s speech signals their “lack of priority” within his administration. That means “the private sector will be required to continue leading the charge on replacing crude imports from unfriendly nations, advancing safer drilling of unconventional reservoirs, and creating a mega-industry in natural gas,” Jurecky said.

However, James C. West, analyst with Barclays Capital Inc., was encouraged by Obama’s “supportive commentary on oil and gas drilling permits and the potential for government directed investment in modern pipelines and R&D overseen by the Department of Defense and Department of Energy. We view the commentary as positive for further development of the nation's hydrocarbon resources, particularly natural gas due to its low carbon and abundant nature.” 

 

US inventories

The Energy Information Administration said Feb. 13 commercial US crude inventories increased just 600,000 bbl to 372.2 million bbl in the week ended Feb. 9, well below the Wall Street consensus for a 2.2 million bbl gain. Gasoline stocks dropped 800,000 bbl to 233.2 million bbl contrary to analysts’ expectations of a 500,000 bbl increase. Finished gasoline inventories increased while blending components decreased. Distillate fuel inventories fell 3.7 million bbl to 125.9 million bbl in the same period, more than double the anticipated 1.8 million bbl decrease.

Imports of crude into the US were down 56,000 b/d to 7.5 million b/d last week. In the 4 weeks through Feb. 8, crude imports averaged 7.7 million b/d, 1 million b/d less than in the comparable period a year ago. Gasoline imports last week averaged 611,000 b/d, while distillate fuel imports averaged 143,000 b/d.

The input of crude into US refineries decreased 121,000 b/d to 14.3 million b/d with units operating at 83.8% of capacity last week. Gasoline production increased to 8.9 million b/d, but distillate fuel production decreased to 4.4 million b/d.

 

Energy prices

The March contract for benchmark US light, sweet crudes continued its rebound, up 48¢ to $97.51/bbl Feb. 12 on the New York Mercantile Exchange. The April contract increased 49¢ to $98.07/bbl. On the US spot market, WTI at Cushing, Okla., was up 48¢ to $97.51/bbl.

Heating oil for March delivery regained 0.47¢ to $3.24/gal on NYMEX. Reformulated stock for oxygenate blending for the same month climbed 2.91¢ to $3.05/gal.

The March natural gas contract fell 4.9¢ to $3.24/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., rose 10¢ to $3.32/MMbtu.

In London, the March IPE contract for North Sea Brent took back 53¢ to $118.66/bbl. Gas oil for February was unchanged at $1,026.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes lost 6¢ to $114.30/bbl.

Contact Sam Fletcher at samf@ogjonline.com

 

Related Articles

Statoil reduces capital budget by $2 billion following 4Q losses

02/06/2015 Statoil ASA has reduced its organic capital expenditure to $18 billion in 2015 from $20 billion in 2014. The move comes on the heels of a fourth qu...

MARKET WATCH: NYMEX oil price bounces back up somewhat

02/06/2015 Crude oil prices on the New York market bounced up $2/bbl to settle slightly above $50/bbl Feb. 5. The positive momentum continued during early Jan...

Oil-price collapse may aggravate producing nations’ other problems

02/05/2015 The recent global crude-oil price plunge could be aggravating underlying problems in Mexico, Colombia, and other Western Hemisphere producing natio...

MARKET WATCH: NYMEX oil drops, ending 4-day rally

02/05/2015 Crude oil prices dropped on the New York market Feb. 4 to settle below $50/bbl and to end a 4-day rally after a weekly government report showed oil...

Alberta’s premier seeks more North American energy integration

02/05/2015 Better policy integration and cooperation will be needed for Canada, Mexico, and the US to fully realize the North American energy renaissance’s po...

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...

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...

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...
White Papers

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...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts


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

When 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



On Demand

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