Oil prices rebounded from yesterday’s declines today despite further declines in equity markets ahead of today’s US data, which will include US inflation figures and the University of Michigan consumer sentiment index for August. Crude futures were supported by this week’s inventories reports, which revealed further reductions in US crude stockpiles, and Germany’s GDP data.
Germany said its GDP expanded at an annualised rate of 2.2% in Q2, marking the largest quarterly gain since the reunification. The update boosted the euro, helping it to gains against the US dollar and bolstering oil prices. A weaker greenback makes dollar denominated commodities such as crude cheaper for holders of other currencies, increasing demand.
The markets took another hit yesterday when the US Labor Department reported a 2,000 gain in initial jobless claims, which reaches five month highs at 484,000. Analysts polled by Reuters expected a decline to 465,000. Continuing claims dropped from 4,570,000 to 4,452,000. This update followed last week’s jobs data that showed a decline of 131,000 in non-farm payrolls in July, while June’s losses were revised upwards from 125,000 to 221,000, raising concerns about the strength of the ongoing economic recovery in the US and the outlook for global energy demand.
This week’s inventories reports were mixed, showing reductions in crude stockpiles along with gains in gasoline supplies. Tuesday’s data from the American Petroleum Institute (API) showed a decrease of 2.2 million barrels in crude inventories, while gasoline stockpiles shed 1.5 million barrels, signalling higher demand in the world’s largest energy consumer. More closely watched data from US Energy information Administration (EIA) that came out on Wednesday showed a decline of 3 million barrels. However, EIA said that gasoline inventories added 400,000 barrels.
The second largest energy consumer, China, said its crude imports fell 3.1% to 4.5 million barrels a day in July on Monday.
The FTSE 100 stood 0.4% below the opening level, while futures for the Dow Jones Industrial Average declined 0.4%, pointing to a lower start on Wall Street.
September Brent Crude rose to US$75.85/barrel, while US light, sweet crude for September delivery climbed to US$75.94/barrel.
Blue chip oil and gas producers were mixed today. BP (LON:BP) declined 1.9%, while fellow supermajor Shell (LON:RDSB) dropped 1.6%.
Cairn Energy (LON:CNE) did better, climbing 1.2%. BG Group (LON:BG) also managed to stay in the positive with a small gain.
Tullow Oil (LON:TLW) was flat.
Amec (LON:AMEC) was unmoved, while another oil and gas engineering firm Petrofac (LON:PFC) was sitting just below the opening level.
Midcaps were headed in different directions today. Dana Petroleum (LON:DNX) was the top performer in the sector in the FTSE 250 with a 2.8% advance. Premier Oil (LON:PMO) rose 1% and JKX Oil & Gas (LON:JKX) followed with a small gain.
Dragon Oil (LON:DGO) and Soco International (LON:SIA) were in the red with 1% losses. Salamander Energy (LON:SMDR) and Heritage Oil (LON:HOIL) shed 1.3% and 1.8% respectively, while Melrose Resources (LON:MRS) was at the bottom of the pile with a 2.8% decline.
Wood Group (LON:WG) was flat. Fellow services company Wellstream Holdings (LON:WSM) lost 1%.
US focused oil and gas junior Caza Oil & Gas (LON:CAZA) led the markets, soaring 150% after making potential oil and gas discoveries on its Bongo prospect in Texas.
Energy investor Xtract Energy PLC (LON:XTR) did well, rallying 10%.
Europa Oil & Gas (LON:EOG) and Iraq operating Irish oil company Petrel Resources (LON:PET) moved in the opposite direction, shedding 6% and 5% respectively.
