Oil prices suffered another weekly loss as geopolitical forces played their part in dampening sentiments. While tensions over Iraq subsided to ease supply concerns in the Middle East, expectations of increased output from Libya also pressured crude.
However, some of the negative sentiment was counterbalanced by a strong jobs report and larger-than-expected drop in oil stockpiles. By end of trading on Friday in New York, West Texas Intermediate (WTI) crude futures were down 1.9% during the week to close at $103.77 per barrel.
Natural gas also slumped to a three-month low over the course of the week on a larger-than-average supply gain. This was partially offset by expectations of an uptick in electric power demand with forecasts of hotter-than-normal weather conditions across most parts of the U.S. Natural gas prices ended Friday at $4.37 per million Btu (MMBtu), down 1.0% over the week. (See last to last week’s recap here: Refiners Sink, Nabors Unit to Merge with C&J Energy)
Recap of the Week’s Most Important Stories
1. Oklahoma City-based predominantly gas producer Chesapeake Energy Corp. (CHK) has spun off its oilfield services business into a stand-alone, publicly traded company called Seventy Seven Energy Inc. (SSE). The new entity was earlier held under Chesapeake Oilfield Operating, L.L.C. (Read More: Chesapeake Closes Spin-off; Seventy Seven Energy Debuts)
2. U.S. energy giant Exxon Mobil Corp’s (XOM) affiliate Esso Belgium – a division of ExxonMobil Petroleum & Chemical B.V.B.A – announced further investments at its Antwerp refinery. (Read More: Exxon to Invest Further in Antwerp Refinery)
3. Corpus Christi Liquefaction LLC, an affiliate of midstream energy company Cheniere Energy Inc. (LNG) announced that it has signed a liquefied natural gas (“LNG”) sale and purchase agreement (SPA) with the Indonesian state-owned oil and natural gas company, PT Pertamina. This deal follows a similar agreement with Woodside Petroleum Ltd. (Read More: Cheniere Energy Inks Second LNG Deal with Pertamina)
4. Independent energy company Warren Resources Inc. (WRES) announced that it has acquired certain assets in Pennsylvania’s Marcellus Shale from Colorado-based oil and natural gas producer, Citrus Energy Corporation and two other parties that owned working interest in the region. The transaction, which marks Warren Resources’ entry into the prolific natural gas basin, was for a purchase price of $352.5 million. (Read More: Warren Resources Enters Marcellus with Citrus Asset Buy)
5. Leading contract drilling company Noble Corp. (NE) intends to sell $1.185 billion in aggregate principal amount of senior unsecured notes due 2022 and 2024 in a private offering to prepare for its previously announced Paragon Offshore spin-off. The proceeds from the issue would be used as partial consideration for the transfer of Noble's standard specification drilling business to Paragon in connection with the spin-off, which is expected to be completed in the ongoing quarter.
Price Performance
The following table shows the price movement of the major oil and gas players over the past week and during the last 6 months.
|
Company |
Last Week |
Last 6 Months |
|
XOM |
+1.91% |
+1.90% |
|
CVX |
+0.66% |
+5.82% |
|
COP |
+0.83% |
+23.55% |
|
OXY |
-0.74% |
+7.17% |
|
SLB |
+0.03% |
+35.01% |
|
RIG |
-1.48% |
-9.40% |
|
VLO |
-1.53% |
-3.07% |
|
TSO |
+2.49% |
+5.76% |
Refiner Tesoro Corp. (TSO) was the week's best performer among the market heavyweights, adding 2.5% to its stock price after recouping some of its losses that followed the oil export ban relaxation.
On the other end of the spectrum, the biggest loser was also a refiner – Valero Energy Corp. (VLO). The downstream operator fell 1.5% during the week, extending the bearish sentiment from the previous week.
Over the last 6 months, oilfield services giant Schlumberger Ltd. (SLB) was the leader of the pack with the company’s shares advancing 35.0%. However, offshore driller Transocean Ltd. (RIG) witnessed a 9.4% price decline over the same time frame.
What’s Next in the Energy World?
Apart from the usual releases in this week – the U.S. government data on oil and natural gas – market participants will be closely tracking Federal Reserve's June policy meeting due on Wednesday.
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