MARKET WATCH: Possible early end of Fed stimulus shakes markets

Oil prices and other commodities fell Feb. 20, with the front-month crude contract dropping 2.3% in the New York futures market among unconfirmed rumors a troubled commodity hedge fund was liquidating.

Commodity market losses pulled down equity stocks with the Oil Service Index down 2.6% and the SIG Oil Exploration & Production Index dropping 3.3%.

Analysts at Standard New York Securities Inc., the Standard Bank Group, reported broad-based liquidation of commodity holdings in late trading Feb. 20 “as the Federal Open Market Committee (FOMC) minutes revealed that a growing number of Federal Reserve members were contemplating an earlier end to quantitative easing.” January minutes of the FOMC, the policy-making arm of the Federal Reserve System, earlier implied the Fed likely would maintain its $85 billion monthly bond-buying stimulus plan until the US labor market improved. However, Standard Bank analysts said the latest minutes published Feb. 20 indicate “more members are now growing concerned about the costs of this quantitative easing and are considering a tapered end to the Fed’s purchases” regardless of the labor market’s performance. That, they said, introduced “an additional element of uncertainty” into markets.

Markets also came under “heavy pressure overnight and into this morning, with a weaker euro and weaker equity markets adding to the slump during London trade. All eyes will be on how the US reacts,” Standard Bank analysts said.

In other news, the US Department of Labor reported the number of new applications for unemployment benefits jumped by 20,000 to a seasonally adjusted increase of 362,000 last week, raising the progressive 4-week average to the highest level in 6 weeks.

There were 5.6 million US residents who received unemployment benefits in the week ended Feb. 2, the latest period calculated.

US inventories

The Energy Information Administration said Feb. 21 commercial US crude inventories escalated by 4.1 million bbl to 376.4 million bbl in the week ended Feb. 15, well above Wall Street’s consensus for a 2 million bbl gain. Gasoline stocks dropped 2.9 million bbl to 230.4 million bbl in the same period, outstripping analysts’ outlook for a 900,000 bbl decline. Finished gasoline inventories increased while blending components decreased. Distillate fuel inventories fell 2.3 million bbl to 123.6 million bbl, below market expectations of 1.8 million bbl loss.

EIA also reported the withdrawal of 127 bcf of natural gas from US underground storage in the week ended Feb. 15, up from Wall Street’s consensus for a 124 bcf pull. That left 2.4 tcf of working gas in storage, down 242 bcf from a year ago but 361 bcf above the 5-year average.

Imports of crude into the US increased 176,000 b/d to 7.7 million b/d last week. In the 4 weeks through Feb. 15 imports averaged 7.7 million b/d, which was 1.1 million bbl less than in the comparable period in 2012. Gasoline imports last week averaged 505,000 b/d while distillate fuel imports averaged 294,000 b/d.

Input of crude into US refineries was down 134,000 b/d to 14.2 million b/d last week with units operating at 82.9% of capacity. Gasoline production increased to 8.9 million b/d as distillate fuel production decreased to 4.3 million b/d.

Energy prices

The March contract for benchmark US sweet, light crudes fell $2.20 to $94.46/bbl Feb. 20 on the New York Mercantile Exchange. The April contract dropped $1.88 to $95.22/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., followed the front-month futures contract down $2.20 to $94.46/bbl.

Heating oil for March delivery continued declining, down 2.43¢ to $3.16/gal on NYMEX. Reformulated stock for oxygenate blending for the same month lost 6.17¢ to $3.06/gal.

The March natural gas contract, however, inched up 0.7¢ to $3.28/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated 8.5¢ to $3.34/MMbtu.

In London, the April IPE contract for North Sea Brent declined $1.92 to $115.60/bbl. Gas oil for March decreased $3.75 to $996/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes continued to retreat, down 34¢ to $113.28/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

EIA: US oil output fell 50,000 b/d in May

07/07/2015 Total US crude oil production dropped 50,000 b/d in May compared with April and is expected to continue falling through early 2016 before growth re...

BLM approves ROW for Elko gas pipeline expansion project

07/07/2015 The US Bureau of Land Management’s Tuscarora, Nev., field office signed a decision record approving a right-of-way for Paiute Pipeline Co.’s (PPC) ...

Obama urged by IPAA president to lift ban on US crude exports

07/07/2015 Commending the administration for its actions allowing some condensate to be exported as a petroleum product, Independent Petroleum Association of ...

AER shuts in 16 Murphy Oil sites in Peace River region for noncompliance

07/07/2015 Alberta Energy Regulator said it has shut in or partially shut in 16 sites operated by Murphy Oil Co. Ltd. in the Peace River region. The sites wer...

MARKET WATCH: NYMEX, Brent oil prices take dive on world oil oversupply concerns

07/07/2015 US light, sweet crude oil prices plummeted more than $4/bbl on the New York market July 6, marking a 5-month low, while Brent crude oil prices on t...

WAFWA: Aerial survey finds lesser prairie chicken population grew

07/06/2015 A recent range-wide aerial survey found the lesser prairie chicken population rose 25% from 2014 to 2015, the Western Association of Fish & Wil...

Buru awarded onshore Canning licenses

07/06/2015 Buru Energy Ltd., Perth, and Mitsubish Corp. have been granted two production licenses for Ungani oil field in the onshore Canning basin of Western...

Cenovus sells royalty business for $3.3 billion

07/06/2015 Cenovus Energy Inc., Calgary, inked an agreement to sell its wholly owned subsidiary Heritage Royalty LP to Ontario Teachers’ Pension Plan for gros...

CERI: Energy, operational efficiencies possible in Canadian oil, gas

07/06/2015 Measures can be taken by operators in the expanding resource-intensive Canadian oil and gas sector to improve both energy efficiency and operationa...
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


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