MARKET WATCH: NYMEX crude oil prices hovering above $48/bbl

Jan. 12, 2015
Crude oil prices for February declined modestly on the New York market in Jan. 9 trading and settled above $48/bbl, which some analysts took as a sign that a dropping weekly rig count helped support oil prices.

Crude oil prices for February declined modestly on the New York market in Jan. 9 trading and settled above $48/bbl, which some analysts took as a sign that a dropping weekly rig count helped support oil prices.

Baker Hughes Inc. said the number of oil rigs operating in the US fell by 61 for the week ended Jan. 9, the largest weekly drop since 1991. The rig count has fallen for 5 consecutive weeks, an indication that oil and gas companies are reducing their drilling programs (OGJ Online, Jan. 9, 2015).

Yet, the total number of oil rigs is still higher than for the same period 1 year ago. At least two banks last week revised their 2015 crude oil price forecasts, continuing a string of reductions in various oil price forecasts.

BNP Paribas SA said it expects Brent will average $60/bbl in 2015, down from the $77/bbl that it previously forecast. BNP also cut its 2015 average for US light, sweet crude oil to $55/bbl, down $15/bbl from a 2015 forecast made in November.

Commerzbank lowered its first-quarter Brent forecast on Jan. 9 to $45/bbl from $65/bbl. For the 2015 average, Comerzbank cut its Brent price to $75/bbl from $80/bbl that it forecast earlier.

Separately, oil services analyst J. David Anderson of Barclays Capital Inc. in New York said a Barclays E&P Spending Survey showed the Middle East is the only region expected to increase upstream spending next year. In November 2014, the Organization of Petroleum Exporting Countries decided to maintain its production quotas.

“This is really about Saudi Arabia, Kuwait, and the UAE’s decision to keep activity at elevated levels,” Anderson said. The survey showed an estimated 2015 Middle East spending of $46 billion, which would be up 14.5% compared with estimated 2014 spending (OGJ Online, Jan. 9, 2015).

Energy prices

The NYMEX February crude oil contract declined 43¢ on Jan. 9, closing at $48.36/bbl. The March contract dropped 29¢ to $48.99/bbl.

The natural gas contract for February gained 1.9¢ to a rounded $2.95/MMbtu. The cash gas price at Henry Hub, La., rose 4¢ to $2.95/MMbtu on Jan. 9.

Freezing temperatures across the Lower 48 states failed to prompt a winter gas price spike, and analysts said US gas storage levels combined with anticipated production are high enough for the nation to get through a severe winter with spare gas supplies.

Production combined with an unseasonably warm December has many analysts and traders more worried about an overabundance of supply rather than a shortage. Consulting firm Bentek Energy said daily gas production has set a record for 11 consecutive months.

Heating oil for February delivery was down by nearly a penny to a rounded $1.70/gal. Reformulated gasoline stock for oxygenate blending for February fell 1.8¢ to remain at a rounded $1.32/gal.

The February ICE contract for Brent crude oil dropped 85¢ to $50.11/bbl. The March contract fell 73¢ to $51.30/bbl. The ICE gas oil contract for January was down $10.75 to $469/tonne.

The average price for OPEC’s basket of 12 benchmark crudes on Jan. 9 was $45.19, down 49¢ from the previous day.

Contact Paula Dittrick at [email protected].

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.