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Weekly Oil & Gas Market Highlights: April 25, 2013

Deloitte Center for Energy Solutions publication

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Key Oil & Gas price indicators

Front Month Futures (August) April 25, 2013 April 18, 2012 % Change
Oil – WTI
(USD per barrel)
$93.64 $87.73 6.7%
Oil – Brent
(USD per barrel)
$103.41 $99.13 4.3%
Natural Gas – NYMEX Henry Hub
(USD per MMBtu)
$4.17 $4.40 -5.3%

Data sources: Bloomberg; CME Group

Crude oil prices

WTI crude futures rose sharply this week, boosted by positive inventory data and lower-than-expected jobless claims data from the U.S. However, weak economic indicators from the Eurozone and China remain a concern.

Closing price
Note: Intra-day prices (every 6 hours)
Data source: Bloomberg

  1. Last Friday, crude futures rose during Asian trading on news that some OPEC member countries are calling for a special meeting to discuss the recent sharp declines in oil price. Earlier in the week, Iran called for a special meeting and on Friday, Venezuela’s Oil Minister Rafael Ramirez stated that his government intends to maintain a $100 per barrel floor on oil prices. WTI crude futures for May delivery closed up 28 cents at $88.01 per barrel.
  2. On Monday, crude futures rose in Asian trading following last week’s >3% sell-off driven by concerns about weakening demand and rising U.S. domestic production. Some traders sought to purchase contracts at a discount believing it had been oversold. The oil minister of the United Arab Emirates (UAE) stated that he believes the oil market is in balance under current supply and demand conditions. The market view of the UAE is usually aligned with Saudi Arabia within OPEC. The WTI May contract closed up 75 cents and expired at $88.76 per barrel. The June contract moved into the front-month position and closed up 92 cents at $89.19 per barrel.
  3. On Tuesday, futures fell as HSBC’s preliminary purchasing manager’s index (PMI) for China fell to 50.5 in April from 51.6 in March. Later in the day, London’s Markit Economics reported that the composite PMI for Europe held firm at 46.5, but the figure marked the 15th straight month with a score below 50, indicating that economic contraction continues to persist in Europe. Markit also reported that the flash U.S. PMI fell to 52 in April from 54.6 in March, the lowest reading in four months. The readings increased concerns about slowing crude consumption in the world’s major demand centers. However, crude prices trimmed earlier losses during New York trading, supported by strong performance of the U.S. equity markets. S&P 500 rose more than 1% on Tuesday. WTI June month futures closed down 1 cent at $89.18 per barrel.
  4. On Wednesday, crude futures rose 2.5% following a bullish oil stocks report from the Energy Information Administration (EIA). The report showed that oil inventories rose 900,000 barrels last week, which was below analyst expectations, but stocks still remain near 23-year highs. Gasoline stocks fell by 3.9 MMbbl, well above analyst expectations, while gasoline demand rose 4.4% to 8.75 MMbbl/d, which gave a bullish outlook to the coming summer driving season. WTI futures closed up $2.25 at $91.43 per barrel.
  5. On Thursday, crude futures fell as Spain reported that unemployment grew to 6 million or 27.2% of the workforce, the highest level in 37 years. The government has been working to reduce its budget deficit, the largest in the European Union, which has negatively affected near-term growth. Futures rose sharply later in the day, however, as the Department of Labor reported that applications for new jobless benefits fell by 15,000 to 340,000, a sharper drop than analysts expected. June month WTI futures closed for the day at $93.64 per barrel, up $2.21.

Natural gas prices

U.S. Henry Hub natural gas futures fell over 5% this week, as the extended winter season comes to a close with weather forecasts showing above-average temperatures in most parts of the U.S. However, low inventory levels continue to hold prices above the $4 mark.

Closing price; December futures expired on November 28.
Note: Intra-day prices (every 6 hours)
Data source: Bloomberg

  1. Last Friday, natural gas futures rose during the day supported by below-average weather forecasts. Due to the cold weather, this year’s injection season started nearly four weeks later than usual with the first increase coming just last week. However, the current inventory levels are still ~30% below last year’s figures. Natural gas futures have gained 40% since February. Henry Hub natural gas futures closed up 0.7 cents at $4.408 per MMBtu.
  2. On Monday, natural gas futures fell due to revised weather forecasts from the National Weather Service (NWS), which showed the recent trend of cool temperatures giving way to above-average temperatures in both the 6–10 and 8–14 day forecasts. Natural gas futures closed down 14.1 cents (3.2%) at $4.267 per MMBtu.
  3. On Tuesday, natural gas futures seesawed during the day. Futures rose on expectations that this week’s natural gas inventory report would show a below-average storage build. However, prices fell later in the day as traders grew bearish about approaching warm temperatures. Natural gas futures closed down 2.9 cents at $4.238 per MMBtu.
  4. Natural gas futures fell on Wednesday adjusting for the close of the heating season. This brought an end to nine weeks of rising prices due to late-season cold weather across much of the country. The revised NWS forecast shows most of the country experiencing only average temperatures in both the 6–10 and 8–14 day forecasts. Futures closed down 7.2 cents at $4.166 per MMBtu.
  5. On Thursday, natural gas futures rose 2% following the release of EIA’s weekly natural gas storage report. The data showed a 30 Bcf injection — which increased the figure to 1,734 Bcf — slightly less than analyst estimates and below the historical average injection. However, later in the day, prices turned bearish as traders eyed the approach of warmer summer temperatures. Henry Hub natural gas futures for May closed up 0.1 cents at $4.167 per MMBtu.

Futures curve

January 2014 WTI futures are 1.6% lower than current prices due to growing North American supply and weak demand growth in major economies globally. However, December 2013 natural gas futures are at a premium of 7.6% to near-month (May) futures due to moderating supply growth, expectations of winter demand, and increased demand from commercial and residential sectors.

Data source: Factset

Weekly U.S. crude oil and natural gas data

Crude oil
Indicators This Period Prior Period % Change
Refinery Inputs (MMBPD) 14.48 15.07 -3.92%
Gasoline Demand (MMBPD) 8.75 8.38 4.42%
Distillate Demand (MMBPD) 3.58 3.63 -1.38%
Production (MMBPD) 7.33 7.20 1.81%
Imports (MMBPD) 7.56 7.43 1.75%
Stocks (million barrels) 388.6 387.6 0.26%
Rotary Rig Count 1,371 1,387 -1.15%
Natural gas
Indicators This Period Prior Period % Change
Working Storage (Bcf) 1,734 1,704 1.76%
Rotary Rig Count 379 377 0.53%
Horizontal Rig Count 1,097 1,102 -0.45%
Consumption (Bcf)* 2,863 (Jan 13) 2,472 (Dec 12) 15.82%
Gross Withdrawals (Bcf)* 2,542 (Jan 13) 2,562 (Dec 12) -0.78%
Canadian Imports (Bcf)* 262.3 (Jan 13) 234 (Dec 12) 12.09%
LNG Imports (Bcf)* 13.5 (Jan 13) 16.8 (Dec 12) -19.64%

* The EIA does not provide weekly natural gas consumption, withdrawal, and import numbers. Thus, the latest available monthly numbers are reported above.
Data source: U.S. Energy Information Administration (EIA)

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