MARKET WATCH: Front-month crude slips in mixed market

Front-month crude prices slipped lower July 8 in UK and New York markets, but the front-month US natural gas contract jumped 3% with forecasts of higher temperatures in coming weeks, especially in the densely populated Northeast.

“Oil prices were down slightly after a rally last week on heightened Middle East concerns,” said analysts in the Houston office of Raymond James & Associates Inc. “Against this backdrop, the Oil Service Index posted a gain of 1% while the SIG Oil Exploration & Production Index remained relatively flat.”

At Standard New York Securities Inc., the Standard Bank Group Oil, analysts reported, “Markets continued to flip-flop, caught between geopolitical concerns and fears over the effect the Federal Reserve’s tapering [of stimulation spending] might have on speculative activity and the dollar.”

With mounting tensions in Egypt, geopolitical concerns recently have had the upper hand. On July 9, Egypt’s Muslim Brotherhood rejected a fast-track timetable by the military-backed interim leadership for amending the Islamist-drafted constitution and for parliamentary and presidential elections by early next year.

Heading into earnings season, the Standard & Poor’s 500 Index advanced 0.5% July 8 “largely due to gains early in the trading session driven by positive Euro-zone news,” said Raymond James analysts.

They also noted the original project timeline for the Keystone XL pipeline projected Canadian oil sands production would be flowing through it to the Gulf Coast by now. “Alas, in the 3-plus years since this project was first hatched, the Keystone XL soap opera has done little more than garner headlines and serve as political fodder,” Raymond James analysts said. “Without the pipeline infrastructure in place to get past Cushing, Okla., the Canadian heavy oil benchmark (Western Canadian Select) has wallowed at an average $30/bbl discount to its comparable global heavy crude benchmark since the start of 2013.”

Eventually, they said, “We believe oil sands supply will find its way down to the Gulf Coast with or without Keystone XL. In fact, we believe the start-up of several other pipelines should alleviate the Canadian oil sands logjam by mid-2014, serving to prop up WCS pricing. Looking out over the next 2½ years, the industry is projected to bring online over 1 million b/d of heavy-focused Midwest-to-Gulf Coast pipeline capacity on top of 300,000-plus b/d of incremental crude-by-rail loading capacity out of Alberta.”

Even if Keystone XL were “given the green light today, it still wouldn’t start up until the second half of 2015,” Raymond James analysts said. “Keystone XL will not be especially relevant over the next several years, although the steady growth of oil sands supply is likely to catch back up to pipeline infrastructure by 2017.”

Meanwhile, a July 6 train derailment reportedly involving 72 tanker cars of oil set off explosions that destroyed 30 buildings in the small Quebec town of Lac-Megantic, killing at least five people and forcing a third of the 6,000 residents to flee their homes (OGJ Online, July 8, 2013).

Although the cause of the accident is still under investigation, Raymond James analysts say it is likely to trigger stricter regulation of rail movements of oil in the US as well as Canada. At the same time, others speculate it may bolster arguments that the Keystone XL pipeline would be a safer means of transporting oil.

Energy prices

The August contract for benchmark US light, sweet crudes slipped 8¢ to $103.14/bbl July 8 on the New York Mercantile Exchange. The September contract dipped 3¢ to $103.02/bbl, but subsequent monthly contracts posted gains. On the US spot market, West Texas Intermediate at Cushing also was down 8¢ to $103.14/bbl.

Heating oil for August delivery declined 0.96¢ to $2.98/gal on NYMEX. Reformulated stock for oxygenate blending for the same month lost 1.31¢ to $2.88/gal.

The August natural gas contract, however, jumped by 12.4¢ to $3.74/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., climbed 12.14¢ to $3.66/MMbtu.

In London, the August IPE contract for North Sea Brent decreased 29¢ to $107.43/bbl. Gas oil for July advanced $1.50 to $913.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes rose 76¢ to $103.96/bbl.

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

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


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