MARKET WATCH: New York crude futures prices continue to rise

The price of crude continued rising in the New York market with the front-month contract inching up 0.4% Mar. 12 as the US dollar slipped against the yen for the first time in a week and US Treasury prices rose as investors took advantage of recently higher yields. Front-month natural gas dipped 0.1%.

In the broader market, the Standard & Poor’s 500 Index declined 0.2%, ending a seven-session rally. The Dow Jones Industrial Average rose for the eighth consecutive session, its longest rally in more than 2 years, but was down in early trading Mar. 13.

“Despite unexpected optimism for a budget deal in Congress and increased confidence in the Federal Reserve Bank’s quantitative easing program, the Euro-zone is reemerging as a potential area of weakness ahead of Italy's latest bond sale,” said analysts in the Houston office of Raymond James & Associates Inc.

The gap between prices for North Sea Brent and West Texas Intermediate continued to narrow, partially because of “uncertainty over possible (but yet unconfirmed) changes to South Korean import-export taxes,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.

In its latest Oil Market Report, released Mar. 13, the International Energy Agency in Paris noted oil futures prices reversed their upward trend in mid-February, with benchmark Brent crude falling to 9-week lows in early March. IEA officials reported global oil supply inched up 90,000 b/d to 90.8 million b/d in February led by a 150,000 b/d hike in production by the Organization of Petroleum Exporting Countries to 30.49 million b/d, primarily from increased Iraqi supply.

“Non-OPEC output slipped by 60,000 b/d in February to 54.1 million b/d but remained 600,000 b/d higher than last year, as North American output growth offset lower European and Latin American supply. Non-OPEC supply is forecast to grow by 1.1 million b/d in 2013 to 54.5 million b/d,” OPEC officials reported.

But the fact increased North American production is offsetting the decline in European and Latin American output “shouldn’t come as a surprise,” said Paul Shrieve, senior vice-president for technical assurance at GL Noble Denton, part of the GL Group.

“European output capabilities are still clearly feeling the effects of strong economic headwinds, but there are growing signs that an ongoing resurgence in North Sea oil and gas activity will help to temper this. The UK and Norway have been identified as top investment destinations this year, and there are suggestions that North Sea investment is reaching record levels. The realization of this output potential will depend on the availability of skilled professionals. According to our research, a shortage of skilled labor will be the greatest barrier to industry growth in 2013, despite predictions that increasing investment in the North Sea will create thousands of new jobs over the next few years. If the skills challenge can be overcome, we may see an increase in European production.”

IEA reduced its 2013 demand forecast to 90.6 million b/d from 90.7 million b/d, reflecting weak economic signals from several key oil markets. Raymond James analysts said, “While the IEA has come closer to our demand numbers in recent months, we still believe the IEA estimate is 120,000 b/d too high. We are modeling 2013 demand of 90.5 million b/d, reflecting Japan's structural decline in crude demand.”

They said, “The updated 2013 IEA forecast is incrementally bearish, but we contend that global supply-demand fundamentals will become even more bearish. We continue to believe Organization for Economic Cooperation and Development inventories will rise above previous all-time highs this year, necessitating a meaningful price correction.”

US inventories

The Energy Information Administration said Mar. 13 commercial US crude inventories increased 2.6 million bbl to 384 million bbl in the week ended Mar. 8, up from the Wall Street consensus for a 2.3 million bbl build and with total inventory well above average for this time of year. Gasoline stocks fell 3.6 million bbl to 224.3 million bbl in the same period, far exceeding analysts’ expectations of a 1.2 million bbl draw. Both finished gasoline and blending components were down. Distillate fuel inventories inched up 100,000 bbl to 120.4 million bbl as opposed to a market outlook for a 2 million bbl drop.

Imports of crude into the US increased 227,000 b/d to 7.5 million b/d last week. In the 4 weeks through Mar. 8, US crude imports averaged 7.6 million b/d, down 1.3 million b/d the comparable period in 2012. Gasoline imports last week averaged 727,000 b/d, while distillate fuel imports averaged 254,000 b/d.

The input of crude into US refineries declined 37,000 b/d to 14 million b/d last week with units operating at 81% of capacity. Gasoline production increased to 9 million b/d, but distillate fuel production decreased to 4.2 million b/d.

Natural gas exports

EIA earlier reported US natural gas exports to Mexico increased 24% to 1.69 bcfd during 2012, the highest level since data collection began in 1973. Mexico’s gas consumption also is at a record high, with imports exceeding 30% of its total supply.

In 2007-11, Mexico’s gas consumption rose 4%/year while domestic production increased only 1.2% annually. Growing demand in the industrial sector drove Mexico’s gas consumption in Mexico to a record-high level in 2011, according to Petroleos Mexicanos. Prior to 2006, almost all of Mexico’s gas imports came from the US, but the country has since diversified its supply through imports of LNG from Nigeria, Qatar, Indonesia, Peru, and Yemen.

The vast majority of imported gas still comes from the US, however. Pipeline shipments from Texas to Mexico rose 34% to 1.3 bcfd in 2009-12 before escalating last year. Most of the US exports departed from Hidalgo County in southwest Texas, “where the supplies were likely coming from the Eagle Ford play,” EIA said.

Several US pipeline projects have been announced that would increase gas exports to Mexico by the end of 2014. If all are built, they would add 3.5 bcfd additional export capacity to meet an expected increase in demand from Mexico's electric power sector.

Energy prices

The April contract for benchmark US light, sweet crudes rose 48¢ to $92.54/bbl Mar. 12 on the New York Mercantile Exchange. The May contract increased 40¢ to $92.92/bbl. On the US spot market, WTI at Cushing, Okla., was up 48¢ to $92.54/bbl.

Heating oil for April delivery continued its decline, down 2.07¢ to $2.95/gal on NYMEX. Reformulated stock for oxygenate blending for the same month dipped 0.22¢ but closed essentially unchanged at a rounded $3.15/gal.

The April natural gas contract slipped 0.4¢ but closed virtually unchanged at a rounded $3.65/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., continued climbing, up 2.2¢ to $3.71/MMbtu.

In London, the April IPE contract for Brent crude decreased 57¢ to $109.65/bbl. Gas oil for March was unchanged at $925/tonne.

The average price for OPEC’s basket of 12 benchmark crudes lost 45¢ to $106.51/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

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

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.


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


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