Crude prices remained flat last week, as encouraging economic
data was offset by a negative Q4 GDP revision and a climb in
distillate inventories, while natural gas declined by a hefty 25%
amid a bearish supply report and predictions of warmer
Among the newsmakers, British major
) lost its bid to block seafood claims payments associated with
the 2010 Gulf of Mexico oil spill settlement.
Crude prices got a boost from upbeat U.S. manufacturing and
consumer-spending reports that painted a positive picture of the
economy. This has fueled hopes for robust fuel and energy demand
in the world's biggest oil consumer. The commodity got some more
support from the renewed political tensions in Ukraine that
rattled global energy markets.
However, the bulls were offset by lower-than-expected fourth
quarter GDP growth, concerns about an economic slowdown in China
and forecasts for warmer weather conditions over much of the
country. Crude prices were also pressured by a surprise rise in
As a result of these factors, by close of trade on Friday,
West Texas Intermediate (WTI) oil settled at around $102.5 per
barrel, essentially flat for the week.
Natural gas crashed last week from its highest level in 5
years on the back of a tepid decrease in supplies and forecasts
of a break in cold weather conditions.
The EIA's weekly inventory release showed that natural gas
stockpiles held in underground storage in the lower 48 states
fell by 95 billion cubic feet (Bcf) for the week ended Feb 21,
below the guided range (of 102-106 Bcf drawdown). Moreover, the
decrease was considerably lower than both last year's withdrawal
of 165 Bcf and the 5-year (2009-2013) average reduction of 125
Bcf for the reported week.
To make things worse, milder weather forecasts - in bulk of
the country over the next few days - are likely to limit natural
gas' demand for heating. Additionally, with the commodity's price
topping $6 recently, many utilities may switch to coal from the
more costly natural gas, denting its prospects further.
Influenced by these factors, natural gas prices ended Friday
at $4.61 per million Btu (MMBtu), down 25.0% over the week.
Energy Week That Was:
The week's energy coverage was dominated by the following
BP's Claim to Delay Spill Payments Rejected
Oil giant BP plc's request to a federal judge to delay oil
spill compensation payments to seafood workers was denied. BP had
appealed to U.S. District Judge Carl Barbier to put on hold the
second phase of payments under the $2.3 billion Seafood
Per the lawsuit, alleged Texas lawyer Mikal Watts fraudulently
claimed to represent 40,000 deckhands in the seafood compensation
program, apart from using fake Social Security numbers and other
fake documents that calls for prompt suspension of all payments.
However, the judge was unconvinced and commented it would be
several months before a second phase of payment is distributed if
the seafood compensation plan is rejected at present.
Chesapeake Earnings Miss, Mulls Rig Unit
Natural gas producer
Chesapeake Energy Corp.
) slid 5% following fourth quarter earnings that miss analyst
expectations by a wide margin, as it grapples with high spending
in the face of constrained production. To assuage investors'
concerns and raise much-needed cash, the company is considering
plans to spin off or sell its oilfield services unit, Chesapeake
Apache to Focus '14 E&P on North America
U.S. energy firm
) announced that it plans to invest $8.5 billion in exploration
and production activities in 2014. A major chunk (about 64%) of
this investment will be focused on onshore North America.
However, this capex is considerably lower than the $10.0 billion
spent last year on account of a smaller asset base.
Apache expects North America onshore liquids production to
grow 15-18% in 2014. This will be a significant growth factor for
the company considering the fact that the region's onshore assets
comprise nearly 60% of Apache's total production. The company
also projects a two-figure global liquids expansion and 5-8%
global oil and gas production growth in 2014.
Forest Oil Plunges on Disappointing Q4
Shares of Denver-based oil and gas company
Forest Oil Corp.
) plummeted almost 38% on Wednesday following a disappointing
earnings announcement. The Hamilton, Bermuda-based company's
underperformance was primarily due to lower volumes and realized
prices. To make matters worse, Forest announced a significant
decline in its year-end estimated proved reserves.
Stellar Result for EOG Resources
Independent energy explorer
EOG Resources Inc.
) delivered stellar fourth quarter results on the back of a
striking improvement in its crude and liquids production. During
the Oct-Dec period, EOG's total volume expanded 16.7% from the
year-earlier level to 48.9 million barrels of oil equivalent, or
531.8 thousand barrels of oil equivalent per day. Crude oil and
condensate production was 244.3 thousand barrels per day, up
approximately 50.2% from the year-ago level.
Performance Chart of Some Major Companies:
The following table shows the price movement of the major oil
and gas players over the past 5 days and during the last 6
Last 5 Day's Performance
6 month performance
Other Headline News on Energy:
QEP Resources Down on Weak Q4 Earnings
Domestic energy explorer
QEP Resources Inc.
) reported weaker-than-expected fourth quarter 2013 results,
hamstrung by lower production. The unfavorable results led to a
12.6% share price fall on the NYSE, in after-market trade hours
on Tuesday. Overall production at QEP Resources during the
quarter was 75.1 billion cubic feet equivalent - 64.3% gas - down
10.5% from the previous-year period.
Newfield Exploration Jumps on Earnings Beat
Oil and gas producer
Newfield Exploration Co.
) jumped more than 7% after coming out with strong earnings on
the back of higher volumes. In particular, the company's domestic
liquids production was up 11% sequentially, with impressive gains
in Oklahoma's Anadarko Basin.
Petrobras Earnings Fall, Gives Spending Plan
Brazil's state-run energy giant Petrobras' fourth quarter
earnings fell on lower output. However, the company's per ADR
profits came ahead of estimates, owing to significant fall in
exploration expenses along with reduced refining expenses.
Additionally, Petrobras revealed its 2030 Strategic Plan, as per
which it expects to place itself among the top five integrated
oil firms in the world by 2030. To support the plan, management
has decided to invest roughly $220.6 billion through
This Week's Outlook:
Apart from the usual releases in this holiday shortened week -
the U.S. government data on oil and natural gas - market
participants await several key reports, including the ISM
manufacturing and services indexes, construction spending,
factory orders and employment data.
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APACHE CORP (APA): Free Stock Analysis Report
BP PLC (BP): Free Stock Analysis Report
CHESAPEAKE ENGY (CHK): Free Stock Analysis
EOG RES INC (EOG): Free Stock Analysis Report
FOREST OIL CORP (FST): Free Stock Analysis
NEWFIELD EXPL (NFX): Free Stock Analysis
QEP RESOURCES (QEP): Free Stock Analysis
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