The 2015 Fuel Market Review

Posted by PS Energy Group on Jan 26, 2016 4:08:11 PM

iStock_000067180427_XXXLarge_web.jpgJust as in 2014, the energy sector was the worst performing sector of 2015, with low prices tumbling even further. It got ugly with crude oil markets reaching new lows and natural gas prices falling to lows not seen in 15 years. Large inventories, weakened demand, geopolitical events, economic pressures and warmer temperatures pressured prices throughout the year with Q2 a bright spot and energy the best performing sector.

 

 Q1 Highlights

  •  The energy sector fell close to 8.3% with the higher U.S. dollar, huge inventories and warmer temperatures pressuring prices. Crude oil production was close to 9.3 million barrels a day, but rig counts continued their fall from November 2014.
  •  Increasing supplies put pressure on NYMEX light sweet crude which was down by 10.64% and closed on March 31st at $47.60 per barrel. Brent crude fared somewhat better—falling 3.87%, it closed at the end of the quarter at $55.11 per barrel. 
  • RBOB gasoline was the best performer—gaining 20.24%. Wholesale gasoline prices dropped by over $3.00 a gallon from the previous year to around $1.80, meaning more cars on the road and increased demand. 
  • Unseasonably warm winter temperatures sent natural gas downward by 8.62% and as corn prices moved lower in the quarter, so did ethanol by 8.8%.

 

Q2 Highlights

  •  Boosted by the consolidation of the U.S. dollar, geopolitical events and low price levels, the energy sector was the best performing sector of Q2, rising 13.81% with NYMEX light sweet crude oil rallying close to 25% and closing on June 30th at $59.47 a barrel. Brent crude was also a winner. Rising 15.39%, it closed at $63.59 per barrel at the end of the quarter.
  •  Domestically, crude oil production was at a record 9.6 million barrels a day, but oil rigs continued to decline and fell to a five-year low of 628. Internationally, crude oil production was strong with Iraqi production at a record 3.145 million barrels a day and Saudi production at a 13-year record of 10.3 million barrels a day.
  •  As in Q1, RBOB gasoline was the best performer of Q2 and up 15.79%. Natural gas and ethanol also posted gains—natural gas gaining 7.27% to close June 30th at $2.8320 per mmbtu and ethanol gaining 8.8% to close June 30th at a year-high of $1.6130 per gallon.

 

Q3 Highlights 

  • The energy sector was the worst performing sector of Q3, plunging 19.31% with concerns over excess supply, weakened demand, geopolitical events and economic pressures—including the plunge in the China stock market, the slowing global economy and the European immigration crisis—affecting prices.
  • NYMEX light sweet crude gave up most of its gains from Q2 and fell 24.18%. Although domestic production was above nine million barrels a day, rig counts fell to 640—down from 1,592 from the same time the previous year. Brent crude did not perform much better and closed on September 30th at $48.33 a barrel—88 cents lower than its Q2 close.
  • RBOB gasoline was the worst performer for Q3. Down 33.31%, it traded in a range of $1.2265 to $2.1857 per gallon from January to September.
  • Natural gas and ethanol also sharply declined. Shedding 10.88%, natural gas fell from around the $3.00 level and closed just above $2.50 per mmbtu on September 30th. Ethanol reversed it gains from Q2 and Chicago ethanol futures closed on September 30th at $1.5350 per gallon—nearly a 5% decline.

 

Q4 Highlights 

  • Falling 15.14%, the energy sector was the worst performer of Q4 with increasing supply and weakening demand pressuring crude oil, oil products and natural gas.
  • Falling close to 18%, NYMEX light sweet crude reached a yearly low on December 21st of $33.98 per barrel and managed a slight rally to close Q4 at 37.04. Domestic production was in line with Q3—nine million barrels a day—but rig counts continued to fall and numbered 536 at the end of the quarter.
  • Brent crude sharply declined. Down 22.86% for the quarter and close to 35% for the year, it closed on December 31st just above its lows at $37.28 per barrel.
  • Down only 7%, RBOB gasoline was the best performer, with low inventories warmer weather and low prices contributing factors. Natural gas did not fare as well, as increasing demand, warmer weather and strong shale production sent prices to their lowest levels since the late 1990s and closing on December 31st at $2.3370 per mmbtu.
  • As corn prices fell, so did ethanol. Down by 8.79% for the quarter, Chicago ethanol futures closed on December 31st at $1.40 a gallon and were lower for the year by 13.95%.

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