US crude oil prices fell again
On June 16, 2017, US crude oil (USO) (OIIL) August futures settled at $44.97 per barrel. On June 9–16, 2017, US crude oil August futures fell 2.4%—the fourth consecutive weekly drop. Global benchmark, Brent crude oil (BNO) active futures fell 1.6% last week.
On June 14, 2017, US crude oil August futures fell 3.7% due to bearish inventory data. On the same day, the EIA (U.S. Energy Information Administration) reported a buildup of 2.1 MMbbls (million barrels) in motor gasoline inventories, while crude oil inventories fell by 1.7 MMbbls in the week ending June 9, 2017.
Gasoline inventories rose compared to the market’s expectation of a fall by 0.46 MMbbls. US crude oil inventories fell less than the market’s expectation of a fall by 2.7 MMbbls.
Saudi Arabia could reduce its crude oil shipments to Asia and the US in July 2017. However, a rise in OPEC members’ crude oil production in May and forecasts of rising production in 2017 and 2018 could have a negative impact on Saudi Arabia’s effort to boost oil prices. Last week, the oil rig count rose by six. A rise in US domestic crude oil production is another bearish factor for oil prices.
Natural gas futures
Natural gas active futures only fell 0.1% on June 9–16, 2017. Last week, bullish inventory data helped support natural gas prices. On June 15, 2017, natural gas active futures rose 4.2% after the EIA reported a rise of 78 Bcf (billion cubic feet) in the natural gas inventory for the week ending on June 9, 2017. The rise was below the market’s expectation of a buildup of 88 Bcf. However, mild weather forecasts could force natural gas futures to retreat.
Last week, the natural gas rig count only rose by one. However, the upsurge in the oil rig count could have a negative impact on natural gas prices.
Below is the performance analysis for major energy subsector ETFs on June 9–16, 2017.
- The VanEck Vectors Oil Services ETF (OIH) fell 1.6%.
- The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 2.9%.
- The Alerian MLP ETF (AMLP) fell 2.2%.
- The Energy Select Sector SPDR ETF (XLE) fell 0.2%.
Last week, major energy ETFs tracked oil’s fall. The Energy Select Sector SPDR ETF (XLE) fell the least among sector-based SPDR ETFs. The Industrial Select Sector SPDR ETF (XLI) rose 1.1% on June 9–16, 2017—the highest gainer among sector-based SPDR ETFs.
Energy stocks on June 12–16
Let’s analyze price performance on June 9–16 for energy stocks that comprise the following major energy ETFs—the VanEck Vectors Oil Services ETF (OIH), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the Alerian MLP ETF (AMLP), the Energy Select Sector SPDR ETF (XLE), and some US-listed international integrated energy stocks.
Sanchez Energy (SN) rose 20.7% on June 9–16, 2017. Last week, it was the largest gainer in the energy sector. On June 16, Sanchez Energy reported on the sale of its non-core Marquis asset to Lonestar Resources US (LONE). The asset is located in the Eagle Ford Shale. On the same day, Sanchez Energy shares rose 13.3%.
Last week, Tidewater (TDW) was the second-largest gainer in the energy sector. On June 12, 2017, Tidewater reported its earnings for the quarter ending March 31, 2017. It reported a loss of 2.01 per share—higher than Thomson Reuters’ estimate of a loss of $1.30 per share. However, its revenue for the quarter ending March 31, 2017, stood at $160.7 million—above Thomson Reuters’ estimate of $120 million.
On June 13, 2017, after its financial results, Tidewater stock rose 7.5%. On June 16, 2017, the stock rose 13.7%.
On June 9–16, 2017, Cobalt International Energy (CIE) fell 13.8%—highest among the energy stocks. On June 12, 2017, Cobalt International Energy announced a reverse stock split in the ratio of 1-for-15. The reverse stock split is applicable to the company’s outstanding shares. On June 16, the stock split process was completed.
In the week ending June 16, RSP Permian (RSPP) was the second-highest loser in the energy sector. RSP Permian’s high correlation with US crude oil futures could explain the large fall in the stock. Notably, except for Carbo Ceramics, all of the other top losers were upstream energy stocks.
Important events on June 19–23, 2017
The following chart shows key events in the energy sector on June 19–23, 2017.
For ongoing updates from the energy sector, please visit Market Realist’s Energy and Power page.