AP: Oil & Gas Equities Pause As Crude Remains Range Bound
Crude Oil futures were slightly weaker today slipping 0.5% ahead of this evening’s key inventory report. However activity remains cautiously in line with the other major financial markets ahead of this evening’s US Federal Reserve (‘The Fed’) Rate decision.
The Fed is widely expected to maintain current rates; however analysts and investors are expected to scrutinise the tone of the statement. Analysts will gauge the Fed’s attitude towards the sustainability of the recent unprecedented economic stimulus. The American demand picture remains crucial given the expectations of today’s EIA inventory report, which are anticipated to show a further increase in heating oil, gasoline and other distillate stockpiles.
Generally analysts expected Crude prices to hold the current range providing the EIA’s (Energy Information Administration) meet expectations.
Despite this week’s anticipated draw down in Crude oil, the recent trend in distillate stockpiles is expected to continue. American gasoline and distillate stockpiles are now the highest they have been since 1983, and this week analysts are expecting inventories to rise by a further 1.6m barrels.
Earlier today some reports suggested that European analysts were beginning to question the justification of current valuations, with the excessive supply indicating a potential decline for the remainder of the year.
As the market awaits further direction from today’s key events, Crude Oil investors are likely to remain poised.
In London major oil and gas stocks did not show much movement in early trade. Supermajors BP (LSE: BP) and Shell (LSE: RDSB) rose marginally, as did another FTSE 100 constituent Cairn Energy (LSE: CNE). BG Group (LSE: BG) was flat following yesterday’s correction. Petrofac (LSE: PFC) posted marginal declines.
Tullow Oil (LSE: TLW) did slightly better, adding 1%.
In the FTSE 250, Heritage Oil (LSE: HOIL) and Dana Petroleum (LSE: DNX) declined about 1%, but Dragon Oil (LSE: DGO) moved slightly higher.
Latin American focused Gold Oil (LSE: GOO) led the juniors, gaining almost 9% to recoup Monday’s losses. Ukraine operating gas producer, Regal Petroleum (AIM: RPT) also was on the rise, gaining 7.8% on an operational update from its Mekhediviska Golotvshinska and Svyrydivske gas fields.
North African exploration and development company Circle Oil (AIM: COP) rose almost 6%
Anglo-French explorer Egdon Resources (AIM: EDR) and EnCore Oil (AIM: EO.) both climbed higher this morning as the firms confirmed they are in advanced negations over Encore’s purchase of Egdon’s Onshore assets, shares gained 8% and 5% respective.
Energy investor Xtract Energy (AIM: XTR), US focused oil and gas junior Caza Oil & Gas (AIM: CAZA) and Gulfsands Petroleum (AIM: GPX), an oil and gas company with assets in Iraq, Syria and Gulf of Mexico, all added 3%.
Diversified junior explorer Leni Oil & Gas (AIM: LGO) gained more than 2½%, while African focused explorer Dominion Petroleum (AIM: DPL) rose 1%.
