Oil & Gas Stock Roundup: Shell, Baytex, Petrobras & OPEC
Zacks Investment Research | Jun 26, 2018 03:33AM ET
It was a week where oil prices were buoyed by OPEC’s plans for a smaller-than-expected output raise. Meanwhile, natural gas futures again fell below the critical $3 threshold.
On the news front, Royal Dutch Shell (LON:RDSa) RDS.A said it has committed to the Fram gas field in the North Sea, while Canada’s Baytex Energy Corp. (TO:BTE) agreed to snap up rival Raging River Exploration Inc. for $2.3 billion. Meanwhile, Petrobras (NYSE:PBR) lost a wage dispute potentially costing the company 4.5 billion in U.S. dollars.
Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures gained about 5.8% to close at $68.58 per barrel, natural gas prices fell some 2.6% to $2.945 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: ExxonMobil, Chevron (NYSE:CVX), Transocean & More )
The U.S. oil benchmark rallied after OPEC agreed to stabilize the market by making modest increase in crude output. At the Vienna meeting, top producers came together and decided to raise volumes by about 1 million barrels per day from July to make up for falling production in Venezuela.
Friday’s consensus figure was well below some of the numbers that had been floated ahead of the meeting, while the actual addition is expected to be even lesser – at around 700,000 barrels a day – due to several member countries’ inability to boost exports.
Earlier in the week, oil futures were buoyed by the federal government’s EIA report that showed a large draw in crude stockpiles due to strong refinery runs. Data showing a reduction in U.S. oil drilling rig count brought further upside.
Meanwhile, natural gas prices moved southward last week as a larger-than-expected increase in supplies overshadowed the commodity’s growing use for air-conditioning.
Recap of the Week’s Most Important Stories
1. Royal Dutch Shell plc recently announced its intention to forge ahead with development of the Fram natural gas field in the North Sea. Banking on improving economics and recovering energy landscape, this is notably the second North Sea project approved by the European energy giant in the past six months.
Shell, along with Exxon Mobil (NYSE:XOM), which is its co-partner in the Fram project, intends to produce around 13,000 barrels of oil equivalent per day (comprising about 41 million cubic feet of gas along with 5,300 barrels of liquids a day) from the two wells in the Fram field by 2020. This will increase the The Zacks Rank #1 (Strong Buy) company’s output in the North Sea by 10%. You can see Hess Discovers Oil in Longtail-1 Exploration Well )
Get The News You Want
Price Performance
The following table shows the price movement of some the major oil and gas players over the past week and during the last 6 months.
Company | Last Week | Last 6 Months |
XOM | +0.9% | -5% |
CVX | +0.9% | -2.7% |
COP | +3.7% | +19% |
OXY | 0% | +10.6% |
SLB | -0.4% | -3.7% |
RIG | +6.5% | +15.4% |
VLO | -2.6% | +18.9% |
MPC | -1.3% | +4.7% |
Reflecting the positive post-OPEC oil market sentiment, the Energy Select Sector SPDR – a popular way to track energy companies – generated a +1.3% return last week. The best performer was offshore drilling powerhouse Transocean Ltd. (NYSE:RIG) whose stock rose 6.5%.
Longer-term, over six months, the sector tracker is up 1.8%. Downstream operator, Valero Energy Corp. (NYSE:VLO) is far and away the major gainer during this period, experiencing a 18.9% price appreciation.
What’s Next in the Energy World?
Following the conclusion of the OPEC meeting, market participants are back closely tracking the regular releases i.e. the U.S. government statistics on oil and natural gas - one of the few solid indicators that comes out regularly. Energy traders will also be focusing on the Baker Hughes data on rig count.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple (NASDAQ:AAPL) sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.