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Wall Street’s Oil and Gas Stocks Follow Crude Lower Due To US Inventories

12th Nov 2009, 4:25 pm
Wall Street’s Oil and Gas Stocks Follow Crude Lower Due To US Inventories

Crude oil prices fell almost 2% today following the supply report from the US Department of Energy. Last week’s report showed that inventories rose by 1 million barrels and the crude market fell away 3% at the end of the week. However severe weather in the Gulf of Mexico, a weak dollar and growing Chinese import demand spurred oil futures back above $80 earlier this week.

Crude prices are continuing to fall as investors evaluate the weekly supply data, which showed that crude inventories were considerably worse than expected. According to the Department of Energy, crude supplies increased by 1.7 million barrels versus analyst expectations of a 1 million increase. Gasoline inventories were also worse than expected rising over 2.5 million barrels, the market had anticipated a decrease of 300,000 barrels.

On the CME (Chicago Mercantile Exchange) Globex Crude oil futures dropped more than $1.00 to trade just above $78/barrel.

The week’s first supply report preceded the sell-off in North America last night. The American Petroleum Institute (API) showed that crude inventories climbed 1.22 million barrels and gasoline supplies rose by 1.4 million barrels in the previous week.

This latest piece of supply data further highlights the gap between crude supply and demand. Similarly the Qatar oil minister was reported to have indicated that OPEC (Organisation of Petroleum Exporting Countries) is unlikely to alter output at its next meeting in December. In several reports Qatar oil minister Abdullah al-Attiyah said that current inventory levels were ‘very high’ and there was no shortage in the market at all.

Elsewhere other reports implied an improving demand scenario going forward. According to data released by Chinese customs authorities early this morning, China’s net oil imports were increasing and almost reached 4.5 million barrels per day (bpd) last month. The data reflects a 13% increase over September and it is the second-highest month on record.

Additionally the US Energy Information Administration (EIA) raised eyebrows yesterday evening as it commented on its projections for 2010. According to the EIA’s projections the gap between supply and demand is due to narrow compared with its previous guidance. EIA said that global oil production next year is forecast to rise to 85.49 million (bpd) while demand is also expected to be higher at 85.40 million bpd. Previous EIA guidance projected a surplus of 290,000 bpd.

On Wall Street, oil and gas stocks followed crude prices lower, Canada’s EnCana (NYSE: ECA) and Anadarko Petroleum (NYSE: APC) were the worst effected, falling 1.75% each. Murphy Oil Corp (NYSE: MUR) and ConoccoPhillips (NYSE: COP) also dropped more than 1%, meanwhile France headquartered Total SA (NYSE: TOT) and Chevron (NYSE: CVX) trade half a percent lower on Thursday.

ExxonMobil (NYSE: XON) were only modestly lower as it eased around a third of a percent below yesterday’s close.

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