Oil prices didn't move by much today as stock markets were flat following Wednesday’s rally that saw the FTSE 100 advance 2.7%, while the Dow Jones and S&P 500 indexes in the US surged 2.5% and 3% respectively. Investors are taking a breather ahead of today's update on US jobless claims and tomorrow's non-farm payrolls and undermployment rate data.
The markets on both sides of the Atlantic got a boost from a batch of upbeat data released in US, Australia and China on Wednesday.
Australia said its GDP grew at a 1.2% rate in Q2, while China’s PMI (purchasing managers index) measuring manufacturing growth climbed from 51.2 in July to 51.7 in August.
Later in the day, the Institute of Supply Management’s (ISM) US manufacturing index was reported to have risen to 56.3 last month, while analysts expected it to decline.
The data sent positive signals to investors, which have been in an increasingly pessimistic mood in the wake of weak US jobs and manufacturing updates released last month.
In other news, a Reuters survey showed that supplies from OPEC (Organization of Petroleum Exporting Countries) declined to the lowest since November 2009, averaging 26.83 million barrels per day for the 11 members with output targets compared to 26.95 million in July.
Total supplies stood at 29.09 million barrels per day. The decrease was attributed to lower output from Nigeria and Iraq due to disruptions.
The oil cartel slashed its output targets by 4.2 million barrels in late 2008 in response to a substantial fall in oil prices.
On Wednesday, the US Energy Department said that crude inventories added 3.4 million barrels last week, while energy information provider Platts expected a gain of 1.9 million barrels. According to the report, gasoline stockpiles declined by 200,000 barrels, while distillates, which include diesel and heating oil, shed 700,000 barrels.
Prior to that, the American Petroleum Investor (API) reported an even bigger gain of 4.8 million barrels in US crude stockpiles.
October Brent Crude slid to US$75.95/barrel, while US light, sweet crude for October delivery inched higher to US$74.06/barrel.
Most blue chip oil and gas producers were in decline today. Supermajors BP (LON:BP) and Shell (LON:RDSB) posted small losses, while Cairn Energy (LON:CNE) and Tullow Oil (LON:TLW) shed 2.6% and 2.2% respectively.
BG Group (LON:BG) outperformed its peer, climbing 1.2%.
Amec (LON:AMEC) stood just above the opening level, while fellow oil and gas engineering firm Petrofac (LON:PFC) declined 1%.
Most midcaps followed the trend. Dragon Oil (LON:DGO), Melrose Resources (LON:MRS), Premier Oil (LON:PMO) and Soco International (LON:SIA) shed less than 1%, while Heritage Oil (LON:HOIL) declined 1.3%.
Salamander Energy (LON:SMDR) did better, tacking on nearly 2%. JKX Oil & Gas (LON:JKX) posted a marginal gain.
Dana Petroleum (LON:DNX) was flat.
Services company Wood Group (LON:WG) dropped 1.6%.
US operating junior Caza Oil & Gas (LON:CAZA) led the sector with a 19% rally. North Sea oil explorer and developer Xcite Energy (LON:XEL) followed with a 4% gain.
