MARKET WATCH: Energy prices undermined by economic worries

Energy prices slumped Apr. 26, following the stock markets down after the Commerce Department reported the US gross domestic product grew 2.5% in the first quarter, falling short of analysts’ outlook for a 3% rise.

Marc Ground at Standard New York Securities Inc., the Standard Bank Group, said, “After a strong drop off sparked by the disappointing US GDP numbers, oil markets started pushing higher later in the day—this underscores the dilemma of a market caught between the prospect of weakening growth being bad for real oil demand but being good for liquidity support in that it implies that the Federal Reserve Bank will stay the quantitative easing course for a while longer perhaps.”

The slower-than-expected recovery of the US economy shifted investors toward low-risk government bonds and away from higher risk oil and gas. That fear was enhanced as some companies have fallen short of analysts’ revenue estimates.

 In Houston, however, analysts with Raymond James & Associates Inc. reported, “The broader markets strengthened last week with the Standard & Poor’s 500 Index gaining 1.5% on the back of strong earnings reports from several companies. Thus far through earnings season, 69% of S&P companies have reported better than expected earnings.”

However, they said, “Despite the strength in domestic earnings, the country itself failed to keep pace with expectations.”

Crude had a net 5.3% gain last week on the New York futures market primarily because of a bullish inventory report. Raymond James analysts said, however, “Natural gas prices faced a notable reversal of fortune . . . as the end of winter weather led the front month contract decline of 4.2% during the week.”

Venezuela outlook

In other news, Raymond James analysts said it is “abundantly clear” the election of the late Venezuelan President Hugo Chavez's handpicked successor ensures that country’s “hardline, aggressively nationalistic energy policy will continue long after Chavez's death.”

They said, “This, of course, will keep a lid on Venezuelan oil production by keeping away foreign investment from companies that are understandably fearful of further violations of property rights. But the effect of ‘chavismo’ is even more widespread than that. Venezuela plays a famously hawkish role within the Organization of Petroleum Exporting Countries in close alliance with Iran.”

On a regional level, Raymond James analysts said, “Venezuelan policies have spread to Ecuador, Bolivia, and, most recently, Argentina. Against this backdrop of hyper-politicized mismanagement, aggregate Latin American oil production has exhibited zero growth over the past decade, and we see no end to the stagnation. Brazil is a relatively friendlier place for energy investment, but it has its own share of policies that exhibit economic nationalism, one of the reasons for its recent flat-lining of oil production.”

Energy prices

The June contract for benchmark US light, sweet crudes lost 64¢ to $93/bbl Apr. 26 on the New York Mercantile Exchange. The July contract retreated 66¢ to $93.25/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 64¢ to $93/bbl.

Heating oil for May delivery dipped 0.05¢ but closed essentially unchanged at a rounded $2.90/gal on NYMEX. Reformulated stock for oxygenate blending for the same month, however, increased 2.31¢ to $2.83/gal.

The May natural gas contract declined 1.5¢ to $4.15/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 6.9¢ to $4.11/MMbtu.

In London, the June IPE contract for North Sea Brent decreased 25¢ to $103.16/bbl. Gas oil for May was up $1.25 to $858.75/tonne.

The average price for OPEC’s basket of 12 benchmark crudes gained 81¢ to $100.70/bbl. So far this year, OPEC’s basket price has averaged $107.43/bbl, down from $109.45/bbl for all of 2012.

Contact Sam Fletcher at samf@ogjonline.com

 

Related Articles

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...

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...

Survey begins of collaboration on the UKCS

06/30/2015

Deloitte has begun a survey about collaboration in the oil and gas producing industry of the UK Continental Shelf.

MARKET WATCH: NYMEX, Brent crude oil prices slump on Greek default fears

06/30/2015 US light, sweet crude oil futures and Brent crude oil futures for August delivery each settled down by more than $1/bbl on June 29, with Brent slid...

Group suggests principles for Alberta royalty review

06/29/2015 The Canadian Association of Petroleum Producers (CAPP) has suggested that four principles guide Alberta in an oil and gas royalty review planned by...

MARKET WATCH: NYMEX crude oil for August hovers below $60/bbl

06/29/2015 US crude oil futures for August delivery settled below $60/bbl on the New York market June 26 as tensions mounted about Greece, which ordered lende...

MARKET WATCH: NYMEX crude oil for August falls below $60/bbl

06/26/2015 US crude oil futures for August delivery settled below $60/bbl on the New York market June 25, and prices continued declining in early June 26 trad...

Gas faces more competition from coal, renewables, IEA official says

06/25/2015 Natural gas faces growing competition from coal and renewable energy sources at a time when its potential demand growth is slowing down, an Interna...

MARKET WATCH: NYMEX prices drop on higher gasoline inventories

06/25/2015 US crude oil futures for August delivery dropped modestly on June 24 after analysts were surprised by a weekly increase in product inventories, esp...
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


Driving Growth and Efficiency with Deep Insights into Operational Data

When 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



On Demand

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


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


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