MARKET WATCH: Ample supply, weakened economy roll back energy prices

Energy prices plunged Apr. 3 with both West Texas Intermediate and North Sea Brent registering their biggest losses in dollar terms this year on a bigger-than-expected increase in crude inventories and weaker-than-expected economic indicators.

“The spread between the two benchmark [crudes] ended the day at $12.66/bbl, a 9-month low,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.

A weaker-than-expected Institute for Supply Management reading for the US nonmanufacturing sector “compounded fears introduced by the manufacturing counterpart earlier this week that perhaps the US economy was not growing as strongly as previously,” Ground said. “ISM nonmanufacturing came in at 54.4 for March (consensus: 55.5), still above the contraction-expansion threshold of 50 but indicating a slowdown from the 56 recorded in February. Earlier in the week, the ISM manufacturing number for March came out well below market expectations (51.3 compared [with] 54), and also significantly below February’s reading of 54.2” (OGJ Online, Apr. 1, 2013).

He said, “We are not surprised to see an easing of the growth momentum that we saw in the first 2 months of the year. Our base case remains that although an improvement on last year, the US will experience fairly tepid growth in 2013.”

On Apr. 4, the US Department of Labor reported new applications for unemployment benefits increased by 28,000 to a seasonally adjusted 385,000. It was the third consecutive week of increased applications and the highest level since late November. Labor officials said the figures may have been affected by the Easter holiday, which varies annually making it difficult to adjust for school closings and other seasonal factors. Analysts speculate the rise indicates increased layoffs because of steep cuts in government spending.

Some 5.3 million people collected unemployment benefits in the week ended Mar. 16, the latest data available.

North Korea continues to generate political tension with its missile threats. However, analysts in the Houston office of Raymond James & Associates Inc. said, “Markets have yet to panic about the unrest, continuing to focus on global economic recovery instead.”

US inventories

The Energy Information Administration reported the withdrawal of 94 bcf of natural gas from US underground storage in the week ended Mar. 29, exceeding Wall Street’s consensus for a 92 bcf out-take. That left 1.687 tcf of working gas in storage, down 779 bcf from year-ago level and 37 bcf below the 5-year average.

EIA earlier said commercial US crude inventories increased by 2.7 million bbl to 388.6 million bbl last week, surpassing the Wall Street consensus for a gain of 2.1 million bbl. Gasoline stocks declined 600,000 bbl to 220.7 million bbl, short of the 1 million bbl draw analysts expected. Both finished gasoline and blending components were down. Distillate fuel inventories fell 2.3 million bbl to 113 million bbl, exceeding the outlook for a 1.1 million bbl drop (OGJ Online, Apr. 3, 2013).

The overall draw from the "Big Three" inventories of crude, gasoline, and distillate fuels totaled 100,000 bbl, which was “mild but higher than expected—analysts were predicting that inventories would stay flat,” said Raymond James officials. Nevertheless, they said, “The unexpected increase in crude stocks is notable, given that crude imports fell slightly week-to-week and refinery utilization remains at the top of its 5-year range. Total petroleum demand climbed another 0.5% after a big jump the previous week.”

They noted crude inventories at Cushing, Okla., declined 200,000 bbl but remained 9.9 million bbl above the year-ago level and well above seasonal norms.

Energy prices

The May contract for benchmark US sweet, light crudes fell $2.74 to $94.45/bbl Apr. 3 on the New York Mercantile Exchange. The June contract dropped $2.73 to $94.77/bbl. On the US spot market, WTI at Cushing also was down $2.74 to $94.45/bbl.

Heating oil for May delivery lost 8.54¢ to $3/gal on NYMEX. Reformulated stock for oxygenate blending for the same month plunged 12.68¢ to $2.91/gal.

The May natural gas contract decreased 6.9¢ to $3.90/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., declined 4¢ to $4.01/MMbtu.

In London, the May IPE contract for North Sea Brent fell $3.58 to $107.11/bbl—“its lowest close since mid-December,” Ground reported. Gas oil for April was down $16.75 to $912.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes dropped $1.36 to $106.80/bbl, wiping out its gain from the previous session.

Contact Sam Fletcher at samf@ogjonline.com.

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

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

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
Available Webcasts


OGJ's Midyear Forecast 2015

When 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



On Demand

Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

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