Weekly Oil & Gas Market Highlights: April 12, 2012
Deloitte Center for Energy Solutions publication
Key Oil & Gas price indicators for the prior seven days
|Crude oil, USD per bbl||Noon (EDT) on Thursday, 4/12/12||Noon (EDT) on Thursday, 4/5/12|
|Front-Month NYMEX Light, Sweet Crude Oil (“WTI”) Futures||$103.92 (May-2012 Contract)||$102.81 (May-2012 Contract)|
|WTI Cushing Spot||$103.94||$102.64|
|Dated Brent Spot||$120.92||$122.51|
|Natural gas, USD per MMBtu||Noon (EDT) on Thursday, 4/12/12||Noon (EDT) on Thursday, 4/5/12|
|Front-Month NYMEX Henry Hub Futures||$2.01 (May-2012 Contract)||$2.11 (May-2012 Contract)|
|Henry Hub Spot||$1.91||$2.06|
Data sources: Bloomberg; CME Group
Oil & Gas highlights
- NYMEX WTI crude futures for May ended the week up largely driven by a drop in stocks of gasoline and distillates as well expectations of further quantitative easing in major OECD economies and a falling dollar.
- When futures trading resumed on Monday following the close of trade on Friday due to the holiday, futures prices fell as no news emerged to counter balance the weak U.S. jobs figure last Thursday and the continuing bearish build in crude stocks. Futures prices fell further on news that China’s Consumer Price Index (CPI) had increased to an annualized 3.6% in March. An increase in China’s CPI indicates that China may begin to rein in its recent expansionary policies in order to curb inflation, a move that is viewed as bearish for crude demand in the world’s second largest oil consuming nation. However, futures prices began rising as the China Association of Automobile Manufacturers announced that passenger car sales in China grew 4.5% in March, which is bullish for domestic demand.
- Crude futures tumbled in Asian trading on Tuesday as China reported that its balance of trade increased to a surplus of $5.35 billion compared to expectations of a $3.2 billion deficit. The trade surplus highlights that China’s export-driven economy may be slowing. Although China has been working to bolster internal demand-led growth, such internal growth is still in development. WTI futures fell $1.40 on the news to $101.02 per barrel. In another potentially bearish sign, the American Petroleum Institute reported that crude stocks increased by 6.58 MMbbl last week. The more closely watched oil stocks data from the Energy Information Agency (EIA) will be released later this week.
- In Asian trading on Wednesday, futures prices climbed on news that Japan’s core machineries orders rose in February by 4.8% surpassing analyst expectations for a decline of less than 1%. Futures prices gained as the euro advanced against the dollar as analysts expect that Spain will see a reduction in its borrowing costs as a result of a new European Central Bank bond-purchase program. Futures prices climbed higher during the day as the EIA announced that gasoline inventories fell by 4.28 MMbbl last week to 217.6 MMbbl and distillate stocks decreased by 4 MMbbl exceeding analyst expectations. Futures prices gained $1.56 on the news. Overall futures prices are on a downward trend as Middle East tensions have dropped to the background and there are renewed concerns about the Eurozone debt crisis and economic weakness in the U.S. and China.
- On Thursday, crude futures continued a second day of gains driven primarily by information from the financial sector. Bank of Japan (BOJ) Governor, Masaaki Shirakawa, said that the country would pursue “powerful easing” in order to combat deflation in the Japanese economy. The BOJ set an inflation goal of 1% for the country. In the U.S. Federal Reserve Vice Chairman Janet Yellen, said that the Fed is likely to keep interest rates low through 2014 as a result of missing their target for full employment and little evidence of inflation. The news increased speculation that there may be a further round of quantitative easing, which sent the S&P 500 up over 1% and the dollar falling, which is bullish for crude futures prices. The Department of Labor’s announcement that new jobless claims rose by 13,000 last week to 380,000 was not enough to dampen the rally in crude futures throughout the day.
- The EIA did not report NYMEX crude futures prices for the previous week due to the market closure on Friday. However, crude stocks rose by 2.8 MMbbl to 365.2 million. Stocks are 5.9 million barrels higher than a year ago.
- The average retail gasoline price fell $0.002 last week to $3.939 a gallon. Prices were up $0.15 over last year. Gasoline stocks fell 4.3 MMbbl to 217.6 million barrels, which is up 8.0 MMbbl from the same time last year.
- The average retail diesel price was up by $0.006 rising to $4.148 a gallon.
- Distillate stocks were down by 4.0 million barrels to 131.9 million barrels.
Natural Gas highlights
- The EIA reported Henry Hub spot prices dropped last week by $0.157 (7.3%) to $1.91 per MMBtu. Prices fell as a result of temperatures averaging 5.7 degrees warmer than the 30-year average and 4.1 degrees warmer than a year ago, which caused a 0.7% decrease in natural gas consumption.
- Domestic natural gas production rose 0.1% last week and is up 5.4% year on year. U.S. gas imports from Canada were down 2.7% averaging 5.1 Bcf/d. The natural gas rotary rig count fell by 11 rigs to 647. Oil-directed rigs were up by 11 to 1,329.
- Working natural gas in storage was up 8 Bcf to 2,487 Bcf, which is 888 Bcf higher than last year.
- Domestic natural gas consumption fell 0.7% percent from the previous week with the residential/commercial sector rising (7.9%) as well as the industrial sector (1.2%), but the power sector posted a 9.9% decline.
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