Midland-WTI spreads have tightened since the beginning of the year, which is a positive for oil and gas producers with major assets in the Permian/West Texas region.
Current real interest rates are low, which is a positive for commodity prices. However, some feel rates will eventually rise which could put negative pressure on commodities such as oil.
Investors owning non-investment grade companies with funding needs should watch movements in high yield bonds as increasing yields could mean higher funding costs.
Sustained low natural gas prices have spurred power companies to use more natural gas in favor of coal when possible.
The US crude oil benchmark of WTI continues to trade behind Brent, resulting in domestic oil producers receiving less than their international counterparts for each barrel of oil produced.
Last week’s colder than normal weather provided support to natural gas prices and nat gas stocks.
Last week’s upward move in natural gas prices was a positive short term catalyst for domestic natural gas producers.
Last week, WTI prices slid downward which is a negative short-term catalyst for domestic oil and gas producers.
Rigs targeting natural gas rose by seven last week, an unusual data point as natural gas rigs have largely been decreasing in response to low natural gas prices since 3Q11. Continued increases in rigs drilling could further depress natural gas prices.
Last week, the count of oil rigs drilling decreased by eight. A continuation of this trend could signal that oil producers are feeling uneasy about the oil price or operating environment and want to cut back production.
Natural gas inventories declined more than expected, which is a positive indicator of either more than expected natural gas demand or less than expected natural gas supply.
This week marks the third week of warmer than normal winter weather, which is negative for natural gas demand.
Natural gas production has not slowed, despite persistently low natural gas prices.
Natural gas inventories this week fell less than expected again in a negative indicator for natural gas prices and stocks.
Crude inventories increased less than expected last week, which was a positive indicator for oil prices and oil producers.
Last week the spread between West Texas Intermediate (WTI) and Midland crude narrowed, which was positive for producers based in the Permian Basin in West Texas where Midland crude is priced.
Continued warmer weather last week implies less natural gas demand and lower prices, weighing on natural gas producer stocks.
On February 12, the Energy Information Administration raised its outlook for oil prices which is a positive signal for oil producers.
Domestic oil prices (WTI) fell last week while international (Brent crude) oil prices rose resulting in a negative catalyst for domestic producers and a positive catalyst for international producers.
Oil rig counts were down slightly last week after last week’s strong increase. A continued drop of oil rigs would be a bearish signal from oil producers.