Weekly Oil & Gas Highlights Library
A weekly snapshot of current market conditions
The O&G weekly updates are issued on a weekly basis, highlighting news from the previous week’s activities in the oil and gas industry. The purpose of these updates is to provide:
- Key oil and gas price indicators for the prior seven days
- Oil market highlights
- Natural gas highlights
- Information about upcoming Deloitte Oil & Gas Events
Sign up to receive the weekly Oil & Gas Market Highlights Memo
Explore our library of memos
Crude oil
- Last Friday, during Asian trading, crude futures moved within a narrow band just below $94 per barrel as investors awaited the latest data from the U.S. Department of Labor. Crude futures spiked 1.8% later in the day as the data revealed that employment increased by 165,000 new jobs in April while the unemployment rate fell from 7.6% in March to 7.5% in April, the lowest level since December 2008. The increase in WTI futures helped reduce the Brent-WTI spread to just above $8.50, the narrowest the spread has been since December 2011. WTI crude futures closed up $1.62 at $95.61 per barrel on NYMEX.
- On Monday, crude futures rose due to roiling tensions in the Middle East as Israeli jets struck targets inside Syria over the weekend. Syrian officials said that the act was a “declaration of war” by Israel on Syria. There were also reports that Syrian President Bashar al-Assad had given militants permission to strike targets inside Israel in response. U.S. and European officials held behind-the-scenes discussions over possible military actions against the Syrian government as it is becoming increasingly likely that the Assad regime was behind a recent chemical weapons use in Syria. The country is not a major crude producer, but the possibility that the ongoing Syrian civil war could erupt into a wider regional conflict kept futures high during the day. Crude futures closed up $0.55 at $96.16 per barrel.
- On Tuesday, crude futures fell during Asian trading as it was reported that Saudi Arabia increased production by 180,000 barrels last month to 9.23 MMbbl/d. During New York trading, futures fell more than 1% as Bloomberg reported the results of a survey of energy traders, predicting U.S. weekly crude supplies may have increased by 2 MMbbl in the U.S. Energy Information Administration’s (EIA) data this week. Later during the day, the EIA released its monthly Short Term Energy Outlook in which it reduced its 2013 global oil demand forecast by 70,000 barrels to 89.93 MMbbl/d from 90 MMbbl/d last month. WTI futures closed for the day at $95.62 per barrel, down $0.54.
- On Wednesday, crude futures rose during Asian trading as China’s General Administration of Customs released data showing that crude imports increased 3.7% from a year ago to 5.64 MMbbl/d. China also posted a trade surplus of $18.16 billion in April, which reversed a March trade deficit. During New York trading, the EIA released data that showed crude stockpiles increased by 230,000 barrels to 395.5 MMbbl, the highest level since 1981. According to EIA data, U.S. crude oil production is up nearly 5% since the beginning of the year, while stockpiles are up nearly 10%. Despite the bearish build in stockpiles, futures found strength in refinery utilization, which was up 2.6% to 87% while refined products supplied rose 6.5% to 19.1 MMbbl/d. Crude futures closed up $1 at $96.62 per barrel.
- On Thursday, crude futures traded in a narrow range around $96.50 per barrel after China reported inflation was 2.4% last month, which was above analyst expectations. However, some traders noted that the level was still low enough for China’s central bank to take expansionary measures to boost oil demand. Later during the day, futures fell as the Department of Labor reported new jobless claims fell by 4,000 to 323,000 last week, the lowest level since January 2008. While the falling number is usually a bullish indicator, the news sent the dollar rising 1% versus the euro, which is bearish for oil demand. WTI futures closed for the day at $96.39 per barrel, down $0.23.
Natural gas
- Last Friday, natural gas futures rose as traders bought contracts following a 7% drop in futures the previous day due to a highly bearish inventory report released by the EIA. Many traders believed that contracts had been oversold and bought into the dip. Futures seesawed throughout the day as bears eyed domestic gas production near record highs, moderating spring weather, and increased coal use for power generation. Baker Hughes released data on Friday showing that gas-directed rigs fell by 12 to 354 rigs, the lowest number since 1995. Henry Hub natural gas futures ended up 1.6 cents at $4.041 per MMBtu.
- On Monday, natural gas futures fell as the revised weather forecast by the National Weather Service (NWS) showed above-average temperatures covering most of the western half of the country and an easing up of below-average temperatures along the Gulf and East Coast. However, futures remain supported by natural gas inventories that are below both the year-ago figure and five-year average. Natural gas futures closed down 3 cents at $4.011 per MMBtu.
- Tuesday trading saw natural gas futures fall through key support at $4 per MMBtu. Weather forecasts from the NWS showing moderating temperatures in the 6–10 and 8–14 day forecasts increased speculation that the EIA would report another large build in natural gas inventories this week. Traders are expecting to see strong builds during the current injection season before the onset of the summer cooling season. Natural gas futures closed down 9.1 cents at $3.92 per MMBtu.
- On Wednesday, natural gas futures rose as traders bought contracts following speculation that the market has been oversold in the past few sessions. However, upside was limited as many investors were expecting an above-average build in EIA’s weekly inventory data. Henry Hub gas futures closed up 5.8 cents at $3.978 per MMBtu.
- Natural gas futures fell on Thursday as the EIA released its weekly natural gas storage report, which showed gas inventories increasing by 88 Bcf to 1,865 Bcf, slightly above analyst expectations of 86 Bcf. Futures tumbled to an intraday low of $3.883 per MMBtu as the build compared bearishly to a 30 Bcf build a year ago and the 69 Bcf five-year average build. However, futures recovered later in the day as traders considered that gas stocks are still 28% below last year’s record and 5% below the five-year average for this time of year. Natural gas futures closed marginally up at $3.983 per MMBtu.
As used in this document, ‘Deloitte’ means Deloitte LLP (and its subsidiaries). Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.
