Weekly Oil & Gas Market Highlights: June 27, 2013
Deloitte Center for Energy Solutions publication
Key Oil & Gas price indicators
|Front Month Futures||June 27, 2013||June 20, 2013||% Change|
|Oil – WTI
(USD per barrel)
|Oil – Western Canadian Select*
(USD per barrel)
|Oil – Brent
(USD per barrel)
|Natural Gas – NYMEX Henry Hub
(USD per MMBtu)
Data sources: Bloomberg; CME Group
* Western Canadian Select is a blend of Canadian heavy conventional and bitumen crude oils blended with sweet synthetic and condensate oils traded in Hardisty, Canada.
Crude oil prices
WTI crude futures rebounded from earlier losses to close up 1.7% for this week primarily due to positive employment data from the U.S. and a pipeline shutdown in Canada. Prices fell earlier due to weak economic data from China and concerns over a possible slowdown in the Fed’s bond buying program.
Note: Intra-day prices (every 6 hours); June month futures expired on June 20, 2013.
Data source: Bloomberg
- Last Friday, during Asian trading, crude futures rebounded slightly as investors sought to purchase contracts at a discount following Thursday's selloff. Futures fell earlier as the Federal Reserve chairman indicated a potential timeline for ending the Fed's bond buying program, subject to economic conditions prevalent at that time. Later in the day, crude futures fell as China reported crude oil imports were down 6% in May from a year ago, which increased concerns about slowing economic growth in the country. During New York trading, the dollar strengthened versus a basket of currencies on continued speculation that the Fed may begin to curtail its $85 billion bond repurchase program as early as September, which sent WTI futures lower. WTI crude futures for August delivery settled down $1.71 at $93.69 per barrel.
- On Monday, crude futures fell as the state-run Xinhua news agency in China announced the Chinese government would not act to ease a liquidity shortage in the country. The People's Bank of China also announced it will begin tightening its easy money policies. Inflation has been a point of concern for the government throughout the global economic slowdown. Oil futures began rising during New York trading as Canadian pipeline operators announced the shutdown of a pipeline north of Cheecham, Alberta, due to a spill of an estimated 750 barrels as a result of heavy flooding in the region. Canadian crudes account for >25% of U.S. crude oil imports and the region around Cheecham is a major center of oil sands production. The Athabasca and Waupisoo pipelines have a combined capacity of 1.17 MMbbl/d. Crude futures also rose as a 415,000 bbl/d refinery in Whiting, Indiana, was restarted, increasing crude supply in the market. WTI crude futures closed for the day at $95.18 per barrel, up $1.49.
- On Tuesday, crude futures rose as the Department of Commerce reported durable goods sales increased 3.6% in May over April, exceeding analyst expectations. In other positive U.S. economic news, the Conference Board reported consumer confidence rose from 74.3 in May to 81.4 in June, the highest level in five years. Crude futures fell later in the day as the dollar continued to rise, which is bearish for crude. Reports that Canadian pipeline operators restored operations to part of the pipeline that was closed on Monday also put downward pressure on prices. WTI crude futures settled up $0.14 per barrel at $95.32 on the NYMEX.
- On Wednesday, crude futures fell initially following the release of the U.S. Energy Information Administration’s (EIA) weekly oil stocks report, which showed a bearish 3.7 MMbbl rise in gasoline stocks. Refineries were operating at over 90% capacity, up nearly 1% from a week ago. Oil stocks rose just 18,000 barrels, leaving them virtually unchanged from a week ago at 394.1 MMbbl. However, later, crude futures counter-intuitively rallied with the broader market even as the U.S. Department of Commerce revised down its estimate of first-quarter GDP growth to 1.8% from 2.4%. The downward revision reflected underlying weakness in the U.S. economy, which gave rise to speculation that the Fed would have to continue its bond buying program longer than previously anticipated. WTI crude futures rose $0.18 during the day to close at $95.50 per barrel.
- On Thursday, crude futures rose during Asian trading as China's National Bureau of Statistics announced Chinese industrial companies saw profits increase 16% in May versus a year ago. During New York trading, futures rose sharply as the U.S. Department of Labor reported new jobless claims fell by 9,000 to 346,000 claims. In other positive economic news, the Department of Commerce announced U.S. household purchases rose 0.3% in May, driven by a 0.5% increase in incomes. Crude futures rose $1.55 during the day to close at $97.05 per barrel.
Natural gas prices
U.S. Henry Hub natural gas futures fell sharply this week as revised summer weather forecasts showed below-average temperatures in most of the U.S. and the EIA reported a bearish inventory build. Traders are looking at a late-summer heat wave to support the natural gas prices.
Note: Intra-day prices (every 6 hours); July month futures expired on June 26, 2013.
Data source: Bloomberg
- Last Friday, Henry Hub natural gas futures closed down for the second straight day as an extended forecast from the National Weather Service (NWS) showed warm temperatures easing in most part of the U.S. Nuclear power outages are at just 6% of the total capacity or 5,900 MW, down from 8,900 MW a year ago and a five-year average of 7,000 MW. Baker Hughes weekly rig data showed natural gas-directed rigs falling to 349, an 18-year low. Natural gas futures closed down 10.6 cents at $3.771 per MMBtu.
- On Monday, weather forecasts from the NWS revised during the weekend showed further weakening of summer temperatures in the U.S. Texas and much of the western United States will experience above-average temperatures while the eastern U.S. will experience average-to-slightly-above-average temperatures. Natural gas futures closed down 3.2 cents at $3.739 per MMBtu.
- On Tuesday, natural gas futures ended down for the fourth straight session. Some traders expected the weakening of warm temperatures to result in a modest build in gas inventories this week. The revised 6--10 day forecast from the NWS showed most of the country experiencing average-to-below-average temperatures, with only New England, the Pacific, and Mountain regions experiencing above-average temperatures. Natural gas futures for July delivery closed down 9.2 cents at $3.647 per MMBtu.
- NYMEX gas futures rose on Wednesday as traders went bargain-hunting following the recent selloff. The rise also came as the NWS revised its 6–10 day forecast, which showed above-average temperatures in the West receding while the 8–14 day forecast showed warm temperatures expanding again. With the end of June rapidly approaching, traders are hoping for a late-summer heat wave to boost natural gas demand. Henry Hub natural gas futures for July delivery expired up 6 cents at $3.707 per MMBtu while the August contract moved to the front-month position and closed up 6.7 cents at $3.737 per MMBTU.
- On Thursday, Henry Hub natural gas futures tumbled as the EIA released its weekly natural gas inventory report showing a net injection of 95 Bcf, which was above analyst expectations. Futures fell nearly 4% following the news. Working natural gas in storage now stands at 2,533 Bcf. August-month natural gas futures closed for the day at $3.582 per MMBtu, down 15.5 cents.
March 2014 WTI futures are 4.5% lower than current prices due to growing North American supply and weak demand growth in major economies globally. However, March 2014 natural gas futures are at a premium of 8% to near-month (August) futures due to moderating supply growth and increased demand from commercial and residential sectors.
Data source: Factset
Weekly U.S. crude oil and natural gas data
|Indicators||This Period||Prior Period||% Change|
|Refinery Inputs (MMBPD)||15.70||15.53||1.09%|
|Gasoline Demand (MMBPD)||8.89||8.84||0.57%|
|Distillate Demand (MMBPD)||3.89||4.01||-2.99%|
|Stocks (million barrels)||394.1||394.1||NC|
|Rotary Rig Count||1,405||1,413||-0.57%|
|Indicators||This Period||Prior Period||% Change|
|Working Storage (Bcf)||2,533||2,438||3.90%|
|Rotary Rig Count||349||343||1.75%|
|Horizontal Rig Count||1,079||1,086||-0.64%|
|Consumption (Bcf)*||2,508 (Mar 13)||2,553 (Feb 13)||-1.75%|
|Gross Withdrawals (Bcf)*||2,549 (Mar 13)||2,318 (Feb 13)||9.98%|
|Canadian Imports (Bcf)*||237.8 (Mar 13)||223.5 (Feb 13)||6.37%|
|LNG Imports (Bcf)*||8.3 (Mar 13)||11.4 (Feb 13)||-27.12%|
* The EIA does not provide weekly natural gas consumption, withdrawal, and import numbers. Thus, the latest available monthly numbers are reported above.
NC – No Change;
Data source: U.S. Energy Information Administration (EIA)
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