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

EPA delays proposal to regulate methane emissions until 2015

12/19/2014 The US Environmental Protection Agency is delaying plans to issue proposals to regulate methane emissions from oil and gas operations until 2015, O...

BLM starts process to consider new Nevada lease nominations

12/19/2014 The US Bureau of Land Management’s Battle Mountain, Nev., field office is seeking public comment on 197 parcels of public land, totaling 415,921 ac...

California Bay Area advances plan for enhanced refinery regulations

12/19/2014 California’s Bay Area Air Quality Management District (BAAQMD), the public agency responsible for regulating stationary sources of air pollution in...

IEA finds US energy policy improved in latest in-depth review

12/19/2014 US energy policies have come into sharper focus in the last six years, the International Energy Agency said in its latest periodic review. It speci...

Comstock to suspend 2015 oil drilling in Eagle Ford, TMS

12/19/2014 Due to low crude oil prices, Comstock Resources Inc., Frisco, Tex., plans to suspend its 2015 oil-directed drilling activity on properties in the E...

Mexico uses PSCs in first Round One step

12/19/2014 Mexico is offering production-sharing contracts to companies incorporated in the country for exploration of 14 shallow-water areas in Round One bid...

BASF, Gazprom cancel asset swap

12/19/2014

BASF and OAO Gazprom have agreed not to complete an asset swap that was scheduled for yearend.

AWE pulls out of Otway permit

12/19/2014 AWE Ltd., Sydbey, has decided to pull out of Perth-based junior WHL Energy Ltd.’s offshore Otway Basin permit Vic-P67 after a series of time extens...

Jewell names Maryland energy administrator BOEM’s new director

12/18/2014 US Interior Sec. Sally Jewell appointed Abigail Ross Hopper, who currently directs the Maryland Energy Administration, as the new director of the U...

White Papers

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

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Available Webcasts



The Future of US Refining

When 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



On Demand

Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


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