MARKET WATCH: Oil, gas prices continue to increase

Oil and gas prices continued climbing May 20 amid optimism for a US economic recovery and the prospect of increased demand for crude this summer. Natural gas was up 0.8% on forecasts for warmer weather for most of the country.

The equity market was more cautious on growing concern the Federal Reserve Bank will soon began to wind down its bond-purchase program aimed at stimulating the economy. The SIG Oil Exploration & Production Index and the Oil Service Index followed oil prices higher, however, up 2.1% and 0.9%, respectively.

US crude market

“The US is the world’s largest consumer and importer of crude oil, and consequently its growing tight oil production has had a significant impact (and will potentially have an even larger impact) on the global oil market,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. Imported crude accounted for 57% of total US consumption in 2012, down from 66% in 2005, he said.

“Although other factors such as a fall in demand post-2008 and an increase in conventional oil production played their part, it is also no coincidence that this fall in imports has coincided with the dramatic increase in tight oil production (since 2005 net imports fell 1.7 million b/d, while tight oil production has grown 1.8 million b/d),” Ground said.

This has affected crude imports from the Organization of Petroleum Exporting Countries and non-OPEC producers equally, with “both groups losing around 800,000 b/d of exports each to the US from 2005 to 2012,” said Ground. Hardest hit among OPEC members is Nigeria (down 670,000 b/d), Venezuela (340,000 b/d), and Angola (240,000 b/d).

“The loss to non-OPEC members has been fairly widespread, although Mexico and the UK have suffered the most, having lost 580,000 b/d and 210,000 b/d of net exports [respectively, in 2005-12],” he reported. “For the OPEC producers, most of the lost exports to the US have been redirected to China. This is particularly true for Angola, which has seen growing production; while Venezuelan production has been in decline and Nigerian production has been volatile, in both instances due to varying degrees of natural resource exhaustion, maintenance issues, and lack of investment.”

Over the medium term, countries exporting to the US crude with characteristics most like oil extracted from US shale formations stand to lose the biggest market shares. These include Brent, Bonny Light, and Cabinda crudes from the UK, Nigeria, and Angola, respectively. “This impact will be less felt in the UK, with its production already in decline due to resource exhaustion. For Nigeria and Angola, which both still have many years of viable and potentially increasing production, the loss of the US market has a potentially greater impact. As per their 2012 exports to the US, Nigeria could have to find a new destination for 405,000 b/d (20% of total exports) and Angola 221,000 b/d (14%),” Ground said. However, he said, “It appears as if China would be ready to absorb these displaced exports, with the ultimate effect that these countries’ exports are not adversely impacted, but rather that they just become more dependent on Chinese demand.”

Energy prices

The June contract for benchmark US sweet, light crudes climbed 69¢ to $96.71/bbl May 20 on the New York Mercantile Exchange. The July contract gained 64¢ to $96.93/bbl.

On the US spot market, West Texas Intermediate at Cushing, Okla., was up 59¢ to $96.61/bbl in a rare divergence from the closing price of the front-month futures contract.

Heating oil for June delivery increased 1.38¢ to $2.95/gal on NYMEX. Reformulated stock for oxygenate blending for the same month dipped 0.13¢ but finished essentially unchanged at a rounded $2.91/gal.

The June natural gas contract continued its rally, up 3.5¢ to $4.09/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., regained 21.3¢ to $4.01/MMbtu, wiping out its loss from the previous session.

In London, the July IPE contract for North Sea Brent advanced 16¢ to $104.80/bbl. Gas oil for June lifted $7 to $883/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up 50¢ to $101.95/bbl. So far this year, OPEC’s basket price has averaged $106.39/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

Statoil reduces capital budget by $2 billion following 4Q losses

02/06/2015 Statoil ASA has reduced its organic capital expenditure to $18 billion in 2015 from $20 billion in 2014. The move comes on the heels of a fourth qu...

Chinese regulators approve Sinopec’s plan for grassroots refinery

02/06/2015 China’s National Development and Reform Commission (NDRC) has approved Sinopec Beijing Yanshan Petrochemical Co. Ltd., a subsidiary of China Nation...

BOEM schedules public meetings about draft proposed 5-year OCS plan

02/06/2015 The US Bureau of Ocean Energy Management will hold the first of 20 public meetings in Washington on Feb. 9 to receive public comments on potential ...

Union strike ongoing at US refineries as negotiations continue

02/06/2015 A strike by union workers at nine US refining and petrochemical production plants remains under way as the United Steelworkers Union (USW) continue...

NCOC lets $1.8-billion pipeline contract for Kashagan field

02/06/2015 North Caspian Operating Co. (NCOC) has let a $1.8-billion engineering and construction contract to ERSAI Caspian Contractor LLC, a subsidiary of Sa...

AOPL releases 2015 safety performance and strategic planning report

02/06/2015 The Association of Oil Pipe Lines is committed to further improvements despite a 99.99% safe petroleum liquids delivery rate, AOPL Pres. and Chief ...

MARKET WATCH: NYMEX oil price bounces back up somewhat

02/06/2015 Crude oil prices on the New York market bounced up $2/bbl to settle slightly above $50/bbl Feb. 5. The positive momentum continued during early Jan...

Congressional Republicans renew bid to halt sue-and-settle maneuvers

02/05/2015 Calling it an affront to regulatory accountability that results in unchecked compliance burdens, US Sen. Charles E. Grassley (R-Iowa) and US Rep. D...

Oil-price collapse may aggravate producing nations’ other problems

02/05/2015 The recent global crude-oil price plunge could be aggravating underlying problems in Mexico, Colombia, and other Western Hemisphere producing natio...

White Papers

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

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

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

Available Webcasts



Global LNG: Adjusting to New Realties

When Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

When Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST



On Demand

The Future of US Refining

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


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


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