Commodity Corner: Crude Up on Weather Threat

- Commodity Corner: Crude Up on Weather Threat

Thursday, September 01, 2011
Rigzone Staff
by Saaniya Bangee

Despite shaky equities and a rising dollar, crude futures inched modestly higher Thursday on weather reports of a storm brewing in the Gulf of Mexico.

October oil added 12 cents to its final price tag, settling at $88.93 a barrel on the New York Mercantile Exchange. Oil traded as low as $88.21 a barrel after an earlier intraday peak of $89.90.

The National Hurricane Center reported an 80 percent chance that a tropical wave in the Gulf of Mexico could develop into a tropical cyclone within the next 48 hours. Oil majors such as Shell, ExxonMobil, BP, Anadarko and BP have evacuated nine platforms in the Gulf of Mexico and shut in nearly 80,000 barrels of oil production, according to the Bureau of Ocean Energy Management, Regulation and Enforcement. In addition, 127 million cubic feet per day of natural gas was also shut in.

In other forecasts, initial unemployment claims fell by 12,000 to 409,000 last week. Data reported by the Labor Department helped boost optimism about the economy.

Brent crude, which is used to price many international oil varieties, lost 56 cents to settle lower at $114.29 barrel on fresh concerns over Greece's debt problems. The intraday range for Brent was $113.89 to $115.31 a barrel on the ICE future exchange.

Natural gas for October delivery remained unchanged at $4.05 per thousand cubic feet Thursday.

Gasoline gained 1.64 cents for the first trading session for the October contract. Reformulated gasoline settled at $2.89 a gallon. Some East Coast refineries remain shut down due to Hurricane Irene. Prices fluctuated between $2.85 and $2.92 Thursday.

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Commodity Corner: WTI, Brent Settle Higher

- Commodity Corner: WTI, Brent Settle Higher

Tuesday, August 30, 2011
Rigzone Staff
by Matthew V. Veazey

The WTI and Brent crude oil benchmarks settled higher Tuesday after the Federal Reserve left investors contemplating whether the central bank will try yet again to shore up the sagging U.S. economy.

Light sweet crude oil gained $1.63 to settle at $88.90 a barrel while the Brent picked up $2.14 to end the day at $114.02 a barrel after the Fed released the minutes of the August 9, 2011, joint meeting of the Federal Open Market Committee and the Federal Reserve Board of Governors. The minutes reveal support among some members for more monetary action to spur economic growth.

One possible Fed move, which the central bank has initiated twice since the 2008-2009 financial crisis, is quantitative easing. The approach calls for the Fed's purchase of U.S. Treasury bonds so that banks would have more money available to lend to businesses and consumers.

Both "QE1" and "QE2" yielded a weaker U.S. dollar, which in turn was bullish for crude oil. When the dollar weakens, oil—priced in greenbacks—becomes a better value for investors holding other currencies. The minutes show that the Fed voted to extend its September meeting to two days rather than one, giving it more time to consider the merits of "QE3" and any other options remaining at its disposal.

Also boosting oil was the development of Tropical Storm Katia in the eastern Atlantic Ocean. Located approximately 750 miles west of the Cape Verde Islands late Tuesday, Katia was moving toward the west-northwest at 20 miles per hour. The National Hurricane Center expects the storm to be a major hurricane by Saturday afternoon, when it should be centered to the east of the Lesser Antilles.

During Tuesday's floor trading, the WTI fluctuated from $86.46 to $89.21. The Brent peaked $114.20 and bottomed out at $111.22.

Natural gas for October delivery settled at $3.91 per thousand cubic feet, up a nickel from the final price for the now-expired September contract. October natural gas traded within a range from $3.78 to $3.92.

September gasoline gained nine cents to end the day just under $3.00 a gallon. The futures price fluctuated from $2.897 to $3.00.

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Commodity Corner: Oil Declines on GDP Data

- Commodity Corner: Oil Declines on GDP Data

Tuesday, August 16, 2011
Rigzone Staff
by Matthew V. Veazey

The WTI and Brent contracts settled lower Tuesday after the release of a key European Union economic indicator supported a pessimistic outlook for global crude oil demand.

Light sweet crude oil for September delivery lost $1.23 to end the day at $86.65 a barrel while Brent slipped 44 cents to settle at $109.47 a barrel. Eurostat, the statistical arm of the EU, on Tuesday announced that gross domestic product throughout the bloc rose by only 0.2 percent in the second quarter. GDP growth during the first quarter was a more robust 0.8 percent; however, Eurostat pointed out that the latest second quarter figure beats that of the corresponding period in 2010 by 1.7 percent.

The WTI contract price fluctuated from $85.62 to $87.93 during Tuesday's session.

Front-month natural gas lost nine cents to settle at $3.93 per thousand cubic feet. Forecast models show milder temperatures from the Midwest to the Northeast through the remainder of this month, chilling cooling demand projections for the regions.

The September natural gas contract traded within a range from $3.90 to $4.04 Tuesday.

The price of a gallon of reformulated gasoline fell two cents to end the day at $2.85. September gasoline peaked at $2.87 and bottomed out at $2.83.

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Commodity Corner: Mfg. Data Stoke Oil Demand Fears

- Commodity Corner: Mfg. Data Stoke Oil Demand Fears

Monday, August 01, 2011
Rigzone Staff
by Matthew V. Veazey

The September contract price for light sweet crude oil settled at $94.89 a barrel Monday. The WTI traded within a range from $93.42 to $98.60.

The 81-cent day-on-day loss followed the release of disappointing July manufacturing figures by the Institute of Supply Management (ISM). ISM, which bases its findings on surveys of manufacturing supply managers, reported that the U.S. manufacturing sector expanded at a slower rate in July. The organization's closely monitored Purchasing Manager's Index (PMI) fell from 55.3 to 50.9 from June to July; a value above 50 generally means that the manufacturing sector is expanding.

"Production and employment also showed continued growth in July, but at slower rates than in June," ISM Manufacturing Business Survey Committee Chair Bradley J. Holcomb said in written statement. "The New Orders Index registered 49.2 percent, indicating contraction for the first time since June of 2009, when it registered 48.9 percent." Holcomb also pointed out that export sales were very strong and domestic sales were sluggish last month.

Brent futures edged upward Monday, gaining seven cents to settle at $116.81 a barrel. The Brent contract price peaked at $119.95 and bottomed out at $114.86.

Weather forecast models are projecting above-normal temperatures throughout the eastern half of the U.S. through the middle of next week, and cooling demand is expected to increase as a result. September natural gas gained 4.3 cents to end the day at $4.19 per thousand cubic feet.

A new weather system in the Caribbean could also have an effect on natural gas prices over the next several days. The National Hurricane Center in Miami reported Monday afternoon that a "vigorous" tropical wave has formed near the Lesser Antilles and will likely to develop into a tropical cyclone by the middle of the week. The system, which was moving west-northwestward at 15 to 20 miles per hour at 2 p.m. EDT Monday, would be named Emily if it strengthens into a tropical storm.

September natural gas traded within a range from $4.13 to $4.20 Monday.

Gasoline for September delivery lost a penny Monday to settle at $3.05 a gallon after fluctuating from just under $3.01 to $3.145. The August contract, which expired Friday, settled at $3.11.

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Commodity Corner: Crude Up on Demand Promise

- Commodity Corner: Crude Up on Demand Promise

Tuesday, July 05, 2011
Rigzone Staff
by Saaniya Bangee

Oil futures soared more than 2 percent Tuesday on demand expectations. Light, sweet crude settled up $1.95 at $96.89 a barrel on the New York Mercantile Exchange (NYMEX). Prices for crude oil peaked at $97.48 a barrel.

Barclays Capital raised its 2012 forecasts for Nymex and Brent crude. It forecasts 2012 Nymex crude at $110 a barrel and Brent crude at $115. Barclays claims China, India, Saudi Arabia and Brazil will be the main sources of demand growth in 2012.

Meanwhile, Saudi Arabia's move to reduce the price of August Arab Light oil for its Asian buyers also pressured oil prices Tuesday.

The U.S. Commerce Department reported a 0.8 percent increase in factory orders. According to reports, U.S. businesses ordered more airplanes, automobiles and oil-drilling equipment for the month of May.

Brent crude for August also traded up Tuesday, settling at $113.61 a barrel. The intraday range for Brent crude was $111.23 to $114.34 a barrel.

Front-month natural gas gained nearly 4 cents, ending the trading sessions at $4.36 per thousand cubic feet. Futures rose on warmer weather forecasts. Higher temperatures increase the usage of air conditioning, which in turn increases the demand for natural gas. Natural gas traded between $4.25 and $4.41 Tuesday.

After fluctuating between $2.945 and $3.02, gas prices for the August contract settled at $2.98 per gallon.

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Commodity Corner: Oil, Natural Gas Settle Higher

- Commodity Corner: Oil, Natural Gas Settle Higher

Thursday, June 30, 2011
Rigzone Staff
by Matthew V. Veazey

The price of light sweet crude oil for August delivery gained 65 cents Thursday to settle at $95.42 a barrel.

The WTI received a boost from a weaker dollar as well as a slight improvement in new jobless claims. The Dollar Index declined 0.4 percent, signifying that dollar-denominated crude oil became a better value for investors holding currencies other than the greenback. In addition, the U.S. Department of Labor reported that first-time claims for unemployment insurance declined by 1,000 to 428,000 last week.

The August WTI contract price fluctuated from $93.88 to $95.82. Brent futures settled at $112.40 a barrel. The Brent contract traded within a range from $108.10 to $112.67.

August natural gas gained 5.5 cents to settle at $4.37 per thousand cubic feet. The U.S. Energy Information Administration (EIA) reported that the country's natural gas inventories rose by 78 billion cubic feet last week. The implied build was lower than what analysts had expected. A Platts survey of analysts projected an increase of 80 to 84 Bcf.

Natural gas futures traded within a range from $4.21 to $4.42 Thursday.

July gasoline gained two cents to end the day at $3.03 a gallon—the intraday high. Gasoline bottomed out at $2.98 Thursday.

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Commodity Corner: Oil Gains on Bullish Stocks Report

- Commodity Corner: Oil Gains on Bullish Stocks Report

Wednesday, June 29, 2011
Rigzone Staff
by Matthew V. Veazey

August crude oil on the NYMEX gained $1.88 Wednesday after investors were caught off-guard by a particularly bullish report on oil stocks.

Oil settled at $94.77 a barrel after the U.S. Energy Information Administration (EIA) announced that the country's commercial oil inventories fell by 1.2 million barrels last week to 359.5 million barrels. The 4.3 million-barrel decline from the previous week was much higher than what analysts had projected. A survey of Platts analysts, for instance, had anticipated more modest draw of 1.7 million barrels.

Also supporting oil was a stronger euro, bolstered by the Greek parliament's approval of an austerity package that will qualify the country for a bailout from the European Union and International Monetary Fund. The euro gained 0.4 percent against the dollar Wednesday. Oil, priced in dollars, becomes a better value for investors holding the euro and other currencies other than the greenback when the dollar weakens.

The August WTI contract price peaked at $95.84 and bottomed out at $92.66 during midweek trading. Brent futures gained 3.3 percent Wednesday to reach a price of $112.45.

Natural gas for August delivery lost 4.5 cents to settle at $4.315 per thousand cubic feet. It traded within a range from $4.28 to $4.38.

The July natural gas contract surged 12 cents to end the day at $3.01 a gallon—the intraday high. A sharp decline in gasoline production, as revealed by the EIA, contributed to the rally. The intraday low for gasoline was $2.88.

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Commodity Corner: NYMEX Crude Gains 2.2%

- Commodity Corner: NYMEX Crude Gains 2.2%

Wednesday, June 22, 2011
Rigzone Staff
by Matthew V. Veazey

Front-month crude oil on the NYMEX ended the day at $95.41 a barrel. The Brent contract price settled at $110.95 Tuesday.

The U.S. Energy Information Agency (EIA) reported Wednesday that commercial crude oil stocks stood at 363.8 million barrels for the week ending June 17, 2011, representing a 1.7 million-barrel decline from the previous week. The draw was below some analysts' expectations—a Platts survey of analysts projected a 2 million-barrel decline in inventories—but it was nevertheless satisfactory to support a 2.2 percent day-on-day gain.

Oil surged Wednesday despite a stronger dollar. The euro slid nearly 0.3 percent against the greenback as the debt crises in Europe, most notably in Greece, remain at the fore. After the Greek prime minister survived a no-confidence vote in his country's parliament Tuesday, the government can now focus on getting a series of austerity measures passed. Should the parliament approve the package of tax hikes, spending cuts, and privatizations, the government would then qualify for debt restructuring loans from the EU and IMF.

The WTI fluctuated from $93.24 to $95.40 while the Brent futures price ranged from $109.92 to $113.10.

Although EIA figures showed a lower-than-expected draw in gasoline stocks for last week, July gasoline futures managed to gain nine cents to settle at $2.97 a gallon. According to EIA, total U.S. motor gasoline inventories fell by 464,000 barrels last week to 214.6 million barrels. Analysts surveyed by Platts had anticipated a 1 million-barrel draw.

July gasoline traded within a range from $2.88 to $2.96 Wednesday.

Natural gas for July delivery lost seven cents to end the day at $4.32 per thousand cubic feet. It peaked at $4.44 and bottomed out at $4.315.

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Commodity Corner: Oil, Natural Gas Edge Upward

- Commodity Corner: Oil, Natural Gas Edge Upward

Tuesday, June 21, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil for July delivery settled higher Tuesday on optimism that Greece's parliament would vote in favor of the country's existing government, paving the way for an austerity program and bailout.

Oil ended the day at $93.40 a barrel, a 14-cent gain, as investors speculated about the outcome of a pending confidence vote in Greek Prime Minister's George Papandreou's government. The country's parliament was set to begin voting at midnight local time.

Surviving the confidence vote would give the Papandreou government momentum to pass a slate of austerity measures through parliament that are key for Greece to obtain debt restructuring loans from the European Union and International Monetary Fund. The austerity program includes tax increases, spending cuts, and privatization measures.

July crude traded within a range from $92.50 to $94.74 Tuesday.

Thanks to new weather forecast models predicting hotter-than-normal temperatures from the Southwest to the Northeast, front-month natural gas gained seven cents Tuesday to settle at $4.39 per thousand cubic feet.

July natural gas futures peaked at $4.41 and bottomed out at $4.305. Gasoline lost three cents to end the day at $2.88 a gallon. The July contract price fluctuated from $2.85 to $2.94.

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Commodity Corner: Oil, Natural Gas Settle Lower

- Commodity Corner: Oil, Natural Gas Settle Lower

Monday, June 13, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil for July delivery settled at $97.30 a barrel Monday.

The $1.99 day-on-day decline reflected investors' pessimism about the outlook for U.S. oil demand and the direction of the national economy. Oil traded within a range from $96.13 to $99.32.

Also falling Monday was the natural gas futures price, which lost 11 cents to settle at $4.65 per thousand cubic feet. The July contract price has enjoyed an uptick lately as temperatures in key U.S. cooling markets have exceeded normal ranges. As conditions in the Northeast and other areas moderate, however, the demand for cooling should fall. Moreover, nuclear power plants are concluding maintenance-related downtime and returning to normal operating levels. Consequently, demand for natural gas to generate electricity should decrease.

July natural gas peaked at $4.81 and bottomed out at $4.61 Monday.

Front-month gasoline lost two cents to end the day just under $3.00 a gallon. The July contract price fluctuated from $2.955 to $3.05.

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Commodity Corner: Oil Soars Past $101 a Barrel

- Commodity Corner: Oil Soars Past $101 a Barrel

Thursday, June 09, 2011
Rigzone Staff
by Saaniya Bangee

Oil prices rose 1.2 percent Thursday as investors continued to speculate after OPEC's Wednesday meeting.

For the first time in almost 20 years, the Organization of Petroleum Exporting Countries (OPEC) was unable to reach a consensus on output quotas. The decision-divide, on whether to increase production or not, pushed prices past the $100-mark. Oil futures for July delivery gained $1.19 a barrel to settle at $101.93 Thursday.

The International Energy Agency, which advises some of the wealthiest nations on energy policies, said it was "disappointed" with OPEC's decision and was "ready to work with its member governments and others to help ensure that markets are well supplied."

Meanwhile, the U.S. Energy Department reported that 4.8 million barrels fell last week, the biggest decline of the year. Additionally, the Labor Department reported 427,000 jobless claims for this week, a thousand more than the previous week.

The intraday range for oil was $100.74 to $102.44 a barrel.

Futures for front-month natural gas plunged Thursday, settling at $4.674 per thousand cubic feet. The 3.6 percent-drop came on reports of above-average inventories. According to the Energy Information Administration (EIA), last week's supplies were at 2.187 trillion cubic feet, up 80 billion cubic feet. Prices for natural gas traded between $4.51 and $4.98 Thursday.

Gasoline increased by 6.11 cents settling at $3.04 a gallon. Gasoline futures fluctuated between $2.97 and $3.05.

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Commodity Corner: Oil Sinks on Econ Slowdown Signs

- Commodity Corner: Oil Sinks on Econ Slowdown Signs

Wednesday, June 01, 2011
Rigzone Staff
by Matthew V. Veazey

Lackluster economic data contributed to a drop in crude oil futures Wednesday, reflecting fears that demand for the commodity will decrease.

Crude oil for July delivery fell $2.41 to settle at $100.29 a barrel after two closely followed indicators suggested that U.S. economic growth is becoming more sluggish. The Institute for Supply Management (ISM) announced that its Purchasing Managers' Index (PMI) for May fell 6.9 percentage points lower than April's figure of 60.4 percent.

Last month's 53.5 percent statistic marks the 22nd consecutive month of growth in the manufacturing sector, but it represents the lowest PMI reading in 12 months and the first one to fall below 60 percent this year. ISM cautioned that supplier deliveries are slower and inventories are contracting. New orders, production, and employment continue to grow but at slower rates.

On the employment front, payroll processing firm ADP reported Wednesday that total U.S. private-sector employment grew by 38,000 jobs in May—well below what analysts were expecting. According to ADP, small and medium businesses added 27,000 and 30,000 jobs, respectively, during the period. Meanwhile, large businesses shed 19,000 jobs and the manufacturing industry cut 9,000 jobs.

"Although we continue to see jobs being added to the economy, this month's job figures show that employers believe we are not out of the woods yet when it comes to decisions on hiring," ADP President and Chief Executive Officer Gary C. Butler said in a company statement.

July crude oil traded within a range from $99.96 to $103.31 Wednesday.

The gasoline futures price, which often parallels the movement of the oil price, lost 17 cents to end the day at $2.98 a gallon. July gasoline peaked at $3.06 and bottomed out at $2.97.

July natural gas lost four cents to settle at $4.63 per thousand cubic feet. The July contract price fluctuated from $4.59 to $4.68.

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Commodity Corner: Dollar Declines, Crude Climbs

- Commodity Corner: Dollar Declines, Crude Climbs

Tuesday, May 31, 2011
Rigzone Staff
by Saaniya Bangee

Crude futures climbed to a three-week high Tuesday as concerns eased over Europe's debt crisis.

July's oil prices gained $2.11 Tuesday before settling at $102.70 a barrel on the New York Mercantile Exchange. The greenback fell against the euro as the European Union debated on sending additional financial aid to boost Greece's economy. Luxembourg Prime Minister Jean-Claude Juncker said a new aid package will be decided on by the end of June. A weaker dollar increases the appeal of the dollar-denominated commodities making it cheaper for foreign buyers.

After noticing a 40-barrel spill at a pump station in Kansas, TransCanada temporary closed down its Keystone pipeline—further pressuring oil prices Tuesday. The Keystone pipeline carries half a million barrels of crude per day from Alberta to Cushing, Okla., the largest oil storage hub in the U.S.

Oil prices peaked at $103.39 a barrel and bottomed out at $99.60 on Tuesday.

Natural gas for July delivery traded up Tuesday, adding 15 cents to settle at $4.67 per thousand cubic feet. Prices rose to their highest in four weeks on forecasts predicting above-average weather. Hotter weather increases demand for fuel which is required for air conditioning. The intraday range for natural gas was $4.525 to $4.71 per thousand cubic feet.

Gasoline prices also ended higher Tuesday. After fluctuating between $3.07 and $3.165, gasoline settled at $3.15 a gallon, 5.84 cents higher from the previous trading session.

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Commodity Corner: Oil Settles Above $101

- Commodity Corner: Oil Settles Above $101

Wednesday, May 25, 2011
Rigzone Staff
by Matthew V. Veazey

July crude oil gained $1.73 Wednesday to settle at $101.32.

The midweek rally occurred as the U.S. Energy Information Administration reported an unexpected increase in oil stocks and evidence that refiners are processing greater volumes of crude. In the former case, EIA announced that crude oil inventories have risen 600,000 barrels since last week to a total of 370.9 million barrels. Analysts polled by Platts had expected a 1.6 million-barrel decline in oil stocks.

EIA figures also showed a 1.4-percent week-on-week drop in total distillate stocks, with a May 20, 2011, figure of 141.1 million barrels. During the same period last year, distillate stocks stood at 152.5 million barrels. Last week's distillate stocks decline, coupled with a 502,000-barrel-per-day increase in refinery inputs (to 14.841 million b/d) week-on-week, indicate stronger demand for crude.

July crude oil traded within a range from $98.20 to $101.54 Wednesday.

Natural gas for June delivery gained three cents to $4.38 per thousand cubic feet as the eastern half of the U.S. faces more summer-like conditions. The June contract price fluctuated from $4.32 to $4.385 during the session.

Front-month gasoline also gained three cents to end the day at $3.02 a gallon. June gasoline peaked at $3.02 and bottomed out at $2.94.

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