Crude oil futures managed to recoup some of its early losses today, aided by concerns over fuel supply disruptions in France and a pull back in the US dollar, which rose against other major currencies earlier in the day.
The ongoing strike at France’s largest oil port of Fos-Lavera has blocked off 47 oil tankers, which, along with walkouts at nearly all of the country’s refineries, has cut off a large share of fuel supplies to service stations.
As a result, about 1,500 gas stations in France have run out of fuel.
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Crude prices got more support from yesterday’s surge in stock markets that followed the industrial production data and better than expected quarterly results from Citigroup (NYSE:C).
The Federal Reserve said on Monday that industrial production in the US declined 0.2% September, which was interpreted as another sign that more quantitative easing (QE) is inevitable.
Anticipation of more QE has been the main factor behind the recent surge in equities and commodities as further stimulus measures are expected to drive up economic activity and increase energy demand.
However, while the Fed is apparently inclined to undertake more asset purchases, it is unclear what the scope and the timing of the next round of stimulus would be.
The supply constraints have been beneficial for crude and gasoline prices, yet this was not enough to keep the futures at yesterday’s levels as the positive trend in equity markets appears to be on course for a reversal.
Other quarterly earnings reports that came out yesterday were mixed as even though Halliburton (NYSE:HAL) achieved a 30% jump in revenues to US$4.67 billion, it still failed to match expectations as analysts expected a higher turnover.
Apple (NYSE:AAPL) said profits of US$4.3 billion, though its iPad sales were disappointing.
IBM (NYSE:IBM) also performed well during the quarter, as profits and revenues rose 12% and 3% respectively, yet its results also contained a grain of salt as sales at its technology services business fell short of expectations.
Both Apple and IBM reported after the close, pushing down futures for the Dow Jones and S&P 500 index about 0.5%, also weighing on oil prices.
Traders will be looking to this week’s inventories data for indications of the strong of demand in the US.
The American Petroleum Institute (API) and the US Energy Department will release their reports today and on Wednesday respectively.
Analysts polled by Dow Jones Newswires are expecting to see a gain of 2.4 million barrels in crude inventories, while gasoline stockpiles and distillates, which include diesel and heating oil, are seen falling by 1.3 million barrels and 900,000 barrels respectively.
US light, sweet crude for December delivery, which is currently the most actively traded contracted on the New York Mercantile Exchange (NYMEX), declined to US$83.41/barrel, while January futures dropped to US$84.06/barrel.
On the ICE Exchange, December Brent Crude rose to US$83.92/barrel, while the January contract reached US$84.33/barrel.
Blue chip oil and gas producers were in the red today. Supermajors BP (LON:BP) and Shell (LON:RDSB) posted small losses, as did BG Group (LON:BG) and Tullow Oil (LON:TLW).
Cairn Energy (LON:CNE) managed to stay at the opening level.
Oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC) declined marginally.
Melrose Resources (LON:MRS) was the top riser among the midcaps with a 1.5% gain.
JKX Oil & Gas (LON:JKX) moved in the opposite direction, shedding 2.7%. Salamander Energy (LON:SMDR) and Soco International (LON:SIA) retreated 1.5% and 1.2%, while Dragon Oil (LON:DGO) lost 1% and Premier Oil (LON:PMO) declined marginally.
Dana Petroleum (LON:DNX) and Heritage Oil (LON:HOIL) were little moved.
Wood Group (LON:WG) was down 1.5%. Another services company Wellstream Holdings (LON:WSM) was unmoved.
North Sea explorer Xcite Energy (LON:XEL) was among the top performing oil and gas stocks with an 11% rally. East and Central Africa focused oil and has explorer Dominion Petroleum (LON:DPL) followed, rising 6.5%.
