MARKET WATCH: Oil price decline accelerates; gas price flattens

The recent retreat in oil prices accelerated with front-month crude dropping 1% Aug. 6 in the New York futures market. The front-month natural gas contract traded flat after falling more than 6% last week.

Analysts in the Houston office of Raymond James & Associates Inc. reported, “With the lack of economic news and lighter summer activity weighing on trading volumes, the Standard & Poor’s 500 Index and the Dow Jones Industrial average closed marginally in the red” following hints from two regional Federal Reserve Bank presidents that the bank’s economic stimulus program might begin to taper off as early as September.

Energy stocks pulled back, with the Oil Service Index and the SIG Oil Exploration & Production Index both down 1%. Crude, gas, and equity prices were down in early New York trading Aug. 7 following sell-offs in Asia and Europe.

US inventories

The Energy Information Administration said Aug. 7 commercial US crude inventories fell 1.3 million bbl to 363.3 million bbl in the week ended Aug. 2, obliterating the previous week’s increase that was the first in 5 weeks. Last week’s decline was less than Wall Street’s consensus for a draw of 1.5 million bbl. Gasoline stocks rose 100,000 bbl to 223.6 million bbl last week, above average for this time of year. Analysts were expecting a decline of 500,000 bbl. Finished gasoline inventories increased while blending components decreased. Distillate fuel inventories increased 500,000 bbl to 126.5 million bbl. The market anticipated no change.

Imports of crude into the US were down 254,000 b/d to 7.9 million b/d last week. In the 4 weeks through Aug. 2, US crude imports averaged 8 million b/d, down 946,000 b/d from the comparable period a year ago. Gasoline imports last week averaged 635,000 b/d while distillate fuel imports ran 54,000 b/d.

The input of crude into US refineries declined 72,000 b/d to 15.9 million b/d last week with units operating at 90.9% of capacity. Gasoline production increased to 9.6 million b/d, and distillate fuel production rose to 4.9 million b/d.

The EIA earlier noted the price spread between North Sea Brent and West Texas Intermediate averaged $18/bbl in January, close to its 2012 average of $19/bbl when it reached wide levels as increasing oil production from North Dakota and Texas outpaced the ability of existing pipelines to transport crude to Gulf Coast refineries. The spread widen to $23/bbl as recently as February.

However, the Brent-WTI spread began to narrow considerably in March. By July it averaged slightly above $3/bbl, dipping to the lowest level since the start of 2011. Spot prices for the two benchmark crudes neared parity around $109/bbl July 19, and the spread was as close as $4/bbl July 30. “This increase in the WTI price was the result of new US transport infrastructure and US refineries running at near-record levels,” EIA officials said.

The WTI price rose relative to Brent in the first half of this year as several new crude transportation projects came online, including pipelines and crude-by-rail terminals. This helped clear Midcontinent transportation bottlenecks, particularly around Cushing, Okla. It increased access to domestic light, sweet crudes, and US refineries now are operating at higher capacity. Crude runs have increased steadily since early March to 16.1 million b/d in the week ended July 5, EIA reported.

Energy prices

The September contract for benchmark US light, sweet crudes fell $1.26 to $105.30/bbl Aug. 6 on the New York Mercantile Exchange. The October contract dropped $1.14 to $104.36/bbl. Monthly contracts posted sequentially lower closings through 2015.

Heating oil for September delivery lost 4.39¢ to $3.01/gal on NYMEX. Reformulated stock for oxygenate blending for the same month declined 3.55¢ to $2.92/gal.

The September natural gas contract dipped 0.1¢ but closed essentially unchanged at a rounded $3.32/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 2.6¢ to $3.36/MMbtu.

In London, the September IPE contract for North Sea Brent retreated 52¢ to $108.18/bbl. Gas oil for August was down $11 to $909.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes decreased 87¢ to $105.56/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

EPA proposes voluntary methane reduction program for gas industry

07/24/2015 The US Environmental Protection Agency proposed a voluntary methane reduction program for the natural gas industry that would allow companies to ma...

Petrobras workers stage 24-hr strike

07/24/2015 Workers at beleaguered Petroleo Brasileiro SA (Petrobras) staged a 24-hr strike across Brazil to protest plans by the state-owned company to liquid...

MARKET WATCH: Oil futures hover below $49/bbl

07/24/2015 Light, sweet crude oil futures prices settled under $49/bbl July 23 on the New York market, which means US prices have slid more than 20% since the...

EQT reports high IP from Utica dry gas well

07/24/2015 EQT Corp., Pittsburgh, said a deep, dry gas Utica well averaged 72.9 MMcfd with an average flowing casing pressure of 8,641 psi during a 24-hr deli...

Separate Murkowski bill addresses crude exports, OCS revenue sharing

07/24/2015 US Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-Alas.) introduced legislation that would end the ban on US crude oil expor...

OGUK updates guidelines for well abandonments

07/23/2015

Oil & Gas UK has released updated guidelines for abandonment of wells, including cost estimates.

MARKET WATCH: Oil futures plunge below $50/bbl

07/23/2015

Light, sweet crude oil futures prices plunged lower to settle below $50/bbl on the New York market on July 22.

Cornyn calls for more US energy exports in wake of Iran deal

07/23/2015 US Senate Majority Whip John Cornyn (R-Tex.) said it would be geopolitically, economically, and strategically absurd for the US to maintain outmode...

Post-sanctions Iran initially won’t shake markets up, executive says

07/22/2015 Iran’s resumption of oil and gas exports, once sanctions are lifted under the recently negotiated nuclear limits agreement, probably won’t flood gl...
White Papers

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

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
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When 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.

register:WEBCAST



On Demand

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

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

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


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


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