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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

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April 10, 2014:

Crude oil:

  • Last Friday, crude futures rose as Libyan rebels blocked crude exports from four terminals in Libya. Libyan government officials meanwhile suggested the terminals would reopen within the next two days once the dispute is resolved. Last month, rebel forces attempted to export crude independent of the Libyan government, but were prevented from doing so by the U.S. Navy which intercepted the tanker Morning Glory that had been loaded with contraband crude at Es Sider. Libyan production is currently around 250,000 bbl/d, down from 1.4 MMbbl/d a year ago. Later in the day, crude futures traded sideways as the Department of Labor announced the U.S. economy added 192,000 seasonally adjusted jobs in March. Unemployment in the U.S. remained unchanged at 6.7%, which was slightly higher than economists had expected. WTI crude futures for May delivery rose $0.85 to close at $101.14 per barrel.
  • On Monday, crude futures fell during Asian trading as two of Libya’s oil exporting ports were expected to open soon. Over the weekend, the Libyan government and rebels reached an agreement to reopen the al-Hariga and Zueitina oil terminals for exports. The two terminals export a combined 200,000 bbl/d when operating at full capacity. Crude also fell as investors prepared for refinery maintenance in Europe. Nearly 2 MMbbl/d of refinery capacity will be offline in April. Asia will enter maintenance season in May. WTI crude futures closed down $0.70 at $100.44 per barrel.
  • On Tuesday, crude futures rebounded as pro-Moscow protestors seized government buildings in three cities in eastern Ukraine and called for a referendum for the eastern part of the country to secede. The actions increased market concerns over the stability of energy supplies from Russia and possible sanctions against the country. Later in the day, talks between the Libyan government and rebel forces were expanded to include discussions about opening the two larger ports of Es Sider and Ras Lanuf in addition to al-Hariga and Zueitinia. Although there had been agreements to reopen the latter two ports, no actual exports of oil had yet occurred. Crude futures rose during New York trading as the EIA released its Short Term Energy Outlook. The report lowered expectations for domestic crude production this year to 8.37 MMbbl/d from 8.39 MMbbl/d last month. The reduced estimate was attributed to cold weather conditions across much of the country in the early part of the year, which negatively affected overall production. Even though the estimate was reduced, if it proves accurate, U.S. production will be at the highest level since 1987. WTI crude futures closed up $2.12 at $102.56 per barrel.
  • On Wednesday, geopolitical tensions in Ukraine continued to keep a floor under prices as Russia warned the government of Ukraine that any use of force against the separatist protestors would ignite a civil war in the country. In Libya, rebel forces returned control of the Hariga and Zueitina export terminals to the government, but still maintained control of Es Sider and Ras Lanuf. Government officials said exports from the two ports under their control could begin on Sunday. Later in the day, the EIA released its weekly petroleum data showing crude stocks in the U.S. rising by 4.03 MMbbl, which was above analyst expectations. However, some of the increase was attributed to the reopening of the Houston Ship Channel, which had been closed due to a spill during the reporting period. Crude futures were boosted by a strong 5.19 MMbbl draw on gasoline inventories, which was expected to boost crude demand. WTI crude futures closed up $1.04 at $103.60 per barrel.
  • On Thursday, crude futures fell during Asian trading as China’s General Administration of Customs reported March exports fell 6.6% from a year ago. Imports were also down 11% according to the data. Investors are concerned about a slowdown in China’s economic growth since the country’s oil demand accounts for 25% of the expected growth in global crude demand this year. Crude futures fell as the Libyan government planned the first shipments of crude from the Hariga terminal. Libyan members of parliament will meet over the weekend to discuss the deal between the government and rebel forces. Rebels are seeking greater autonomy for the eastern part of the country where they retain control of the Es Sider and Ras Lanuf exporting facilities. Some lawmakers are objecting to provisions allowing for salary payments to those who defected from government forces during the civil war. Futures reversed course later in the day as the U.S. Department of Labor reported new jobless claims fell by 32,000 to 300,000 claims last week, the lowest level since May 2007. WTI crude futures closed down $0.20 at $103.40 per barrel.

Natural gas:

  • Last Friday, natural gas futures fell as weather forecasts from the National Weather Service (NWS) showed temperatures warming from current lows in the 6–10 day forecast. The warmer weather is expected to drive down demand, allowing natural gas inventories to rebuild over the summer months. Currently, storage levels are at more than a 50% deficit to both year-ago levels and the five-year average. Henry Hub natural gas futures closed down 3.1 cents at $4.439 per MMBtu.
  • On Monday, futures edged slightly higher as revised weather forecasts from the NWS showed cold temperatures across the Midwest in the 6–10 day forecast. Lingering cold conditions are expected to limit an expected storage build this week and possibly push it into next week. Henry Hub natural gas futures closed up 3.7 cents at $4.476 per MMBtu.
  • On Tuesday, natural gas futures continued to rise, driven by expectations of continued below-average temperatures in the Midwest. Concerns about low natural gas inventories are helping to boost prices this week. Natural gas inventories as currently reported by EIA are 822 Bcf, which is 878 Bcf below last year’s level and 992 Bcf below the five-year average. Henry Hub natural gas futures closed up 5.8 cents at $4.534 per MMBtu.
  • On Wednesday, natural gas futures rose, driven by expectations of persisting below-average temperatures over the next week. However, the market was bracing for what some analysts believe could be the first injection of the season. If cold conditions persist, it could indicate a slow start to the injection season. Henry Hub natural gas futures closed up 5.2 cents at $4.586 per MMBtu.
  • On Thursday, natural gas futures rose as the EIA released its weekly natural gas data showing the first gas injection of the season. Working natural gas in storage rose 4 Bcf to 826 Bcf from 822 Bcf. The injection compared bullishly with last year’s injection of 9 Bcf and the five-year average injection of 25 Bcf, raising questions about U.S. producers’ ability to refill natural gas supplies over the summer to meet next winter’s heating demand. Henry Hub natural gas futures closed up 6.9 cents at $4.655 per MMBtu.

2014 archives

April 03, 2014 issue

March 27, 2014 issue

March 20, 2014 issue

March 13, 2014 issue

March 6, 2014 issue

February 27, 2014 issue

February 20, 2014 issue

February 13, 2014 issue

February 6, 2014 issue

January 30, 2014 issue

January 23, 2014 issue

January 16, 2014 issue

January 09, 2014 issue

 

2013 archives

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2012 archives

December 20, 2012 issue

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July 26, 2012 issue

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June 21, 2012 issue

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March 29, 2012 issue

March 22, 2012 issue

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March 1, 2012 issue

February 23, 2012 issue

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February 9, 2012 issue

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January 26, 2012 issue

January 19, 2012 issue

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January 5, 2012 issue

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