MARKET WATCH: Surprise withdrawal boosts gas price

A larger-than-expected withdrawal of natural gas from US underground storage boosted the front-month gas contract 3.2% Mar. 7 in the New York futures market while crude bounced back “a healthy 1.1%” from the previous day’s loss.

The rally invigorated all exploration and production corporate stocks, “especially the gassier names,” said analysts in the Houston office of Raymond James & Associates Inc. The SIG Oil Exploration & Production Index surged ahead 3.2% while the Oil Service Index posted a 0.3% increase.

North Sea Brent registered a marginal gain with a disappointing report of Chinese crude imports and the restart of a North Sea pipeline that had been shut-in 5 days. But the US oil market was buoyed by optimistic data for the US economy. The Federal Reserve Bank reported net worth of US families is the highest since late 2007, “driven by rebounding home prices and stock holdings.” Raymond James analysts said, “Equity investors were modestly pleased by the news yesterday, with the Dow Jones Industrial Average edging up for a third straight all-time high.”

The US Department of Labor reported Mar. 8 US employers provided 236,000 new jobs in February, reducing the country’s unemployment to 7.7% from 7.9% in January. The unemployment rate is now at its lowest level in 4 years. But part of that change was because 130,000 US residents stopped looking for work last month and are no longer counted by the government as unemployed. Also, 10,000 government jobs were terminated in February. Government employment has been declining nearly 4 years.

US inventories

The Energy Information Administration reported the withdrawal of 146 bcf of natural gas from US underground storage in the week ended Mar. 1, leaving 2.08 tcf of working gas in storage. That exceed Wall Street’s consensus for a drawdown of 131 bcf of gas. US natural gas stocks are 361 bcf below the comparable period in 2012 but 269 bcf above the 5-year average (OGJ Online, Mar. 7, 2013).

Raymond James analysts said, “Excluding weather-related demand, there was 2.6 bcfd less natural gas added to storage than this time last year.” US gas storage averaged 0.9 bcfd tighter in the 4 weeks ended Mar. 1.

“Colder weather and higher year-over-year withdrawals have led to the recent rebound in gas prices,” said analysts at Raymond James. “With the colder weather leading to freeze-offs this winter and higher demand for gas, the gas markets have begun to tighten, increasing the year-over-year deficit.” Associated gas and Marcellus production will help offset declines in dry-gas production. However, they expect gas prices to remain range bound for some time.

Energy prices

The April and May contract for benchmark US light, sweet crudes rebound $1.13 each to $91.56/bbl and $92.03/bbl, respectively, Mar. 7 on the New York Mercantile Exchange. On the US spot market, West Texas Intermediate at Cushing, Okla., also was up $1.13 to $91.56/bbl.

Heating oil for April delivery inched up 0.39¢ but closed essentially unchanged at a rounded $2.98/gal on NYMEX. Reformulated stock for oxygenate blending for the same month continued slipping, down 0.14¢, but also was virtually unchanged at a rounded $3.12/gal.

The April natural gas contract jumped 11.2¢ to $3.58/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., fell 2.4¢ to $3.55/MMbtu.

In London, the April IPE contract for North Sea Brent increased 9¢ to $111.15/bbl. Gas oil for March gained $4 to $931/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes dropped 33¢ to $107.31/bbl.

Contact Sam Fletcher at

Related Articles

KMI to buy Shell’s stake in Elba LNG project for $630 million

07/16/2015 Kinder Morgan Inc., Houston, has reached a deal with Royal Dutch Shell PLC to purchase 100% of Shell’s equity interest in Elba Liquefaction Co. LLC...

Genesis to buy Enterprise offshore pipelines

07/16/2015 Genesis Energy LP has agreed to buy the Gulf of Mexico pipelines and services business of Enterprise Products Partners LP for $1.5 billion cash.

Mexican round nets two successful bids

07/16/2015 Two of 14 shallow-water blocks received successful bids on July 15 in Mexico’s historic Round One offering of exploration and production rights (OG...

CAPP: Canada needs global LNG markets for gas production growth

07/16/2015 Canada needs to connect to global LNG markets to avoid a decade of decline in natural gas production, according to the Canadian Association of Petr...

MARKET WATCH: Front-month crude oil price drops to lowest settlement since April

07/16/2015 Light, sweet crude oil prices dropped more than $1/bbl on the New York and London markets July 15, dipping to their lowest settlement since early A...

KMI brings second Texas condensate splitter online

07/15/2015 Kinder Morgan Inc., Houston, has commissioned the second of two splitters at the company’s new petroleum condensate processing facility located nea...

Michigan DEQ report urges ban of heavy oils in Mackinac Straits pipeline

07/15/2015 Michigan’s Department of Environmental Quality’s Petroleum Pipeline Task Force issued a report that recommended that heavy crude and oil sands be k...

PHMSA orders Plains All American to keep Illinois pipeline shut down

07/15/2015 The US Pipeline and Hazardous Materials Safety Administration issued a corrective action order directing Plains All American Pipeline LP to keep a ...

Advocates urge US to end its crude export ban in Iran agreement’s wake

07/15/2015 Advocates called for removing the US ban on exports of domestically produced crude oil in the wake of the July 14 international nuclear weapons agr...
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

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