Crude prices edged up slightly during the past week on Federal
Reserve's confirmation of a recuperating economy, while natural
gas declined amid a weak inventory report and expectations of
milder temperatures with the arrival of spring.
Among the newsmakers, U.S. behemoth
Exxon Mobil Corp.
) is planning to invest around $20 billion in a power project in
Crude prices edged up last week amid Federal Reserve's Taper
announcement, which works on the premise that the U.S. economy is
strong enough. Crude got a further boost from recent geopolitical
tensions associated with the Crimea crisis and news about a
pipeline expansion - likely to amplify takeaway capacity at the
Cushing, Oklahoma storage hub - to be completed sooner than
However, to a large extent, the bulls were offset by the
Energy Information Administration (EIA) report that showed a
significantly higher-than-expected increase in oil inventories.
Prices were also pressured by a stronger greenback after the
Federal Reserve indicated it might increase key lending rates
earlier than expected.
As a result of these factors, by close of trade on Friday,
West Texas Intermediate (WTI) oil settled at around $99.50 per
barrel, gaining a mere 0.2% for the week.
Natural gas fell last week to their lowest level in 2 months
on the back of a bearish supply data and the onset of soft spring
The EIA's weekly inventory release showed that natural gas
stockpiles held in underground storage in the lower 48 states
fell by 48 billion cubic feet (Bcf) for the week ended Mar 14,
below the guided range (of 57-61 Bcf drawdown).
To make things worse, milder spring weather forecasts - in
bulk of the country over the next few days - are likely to limit
natural gas' demand for heating.
Influenced by these factors,
ended Friday at $4.30 per million Btu (MMBtu), down 2.9% over the
Energy Week That Was:
The week's energy coverage was dominated by the following
Exxon, PetroVietnam to Invest $20B
US energy giant Exxon Mobil Corp. intends to team up with
state-owned Vietnam oil and gas group - PetroVietnam - to invest
about $20 billion in a gas-fired power complex, according to the
Ministry of Industry and Trade sources. The project will include
construction of two power plants with a combined capacity of
6,000 to 6,500 megawatts.
The plants would span across 200 hectares in total, but the
locations for them have not been disclosed. This project is
likely to make the U.S. one of the top four foreign investors in
Vietnam along with Japan, South Korea and Taiwan.
PetroChina Reports Profit Growth
ADRs of Chinese energy giant
PetroChina Co. Ltd.
) rose more than 3% after reporting higher 2013 profit despite in
the world's second largest economy. The improved performance
could be attributed to narrower refining losses due to a
favorable pricing policy, together with growth in international
oil and gas output. Importantly, the Beijing-based group has
vowed to reduce capital spending by around 7% in 2014 to RMB 297
billion, thereby strengthening its balance sheet and cash
Shell Consortium Finds Oil Off Sabah
Europe's largest oil company
Royal Dutch Shell plc
), along with its joint venture partners, ConocoPhillips and
Petroliam Nasional Berhad or Petronas, discovered oil offshore
Sabah, Malaysia. Crude was found from the deepwater appraisal
well Limbayong-2, in the Limbayong gas field, located in Block J
off the coast of Sabah. During the appraisal of the gas field,
Shell discovered 136 meters of oil bearing sands in the well.
There are plans to continue the appraisal to determine the
Chesapeake Services Unit Spin-off Likely
U.S gas giant
Chesapeake Energy Corp.
) is preparing for a possible spin-off of its oilfield-services
unit and has filed a Registration Statement on Form 10 with the
U.S Securities and Exchange Commission. The spin-off is an effort
towards reducing costs, debt as well as enhancing the market
value of the company's assets. Per the paperwork filed, the unit
would be converted into a corporation and renamed Seventy Seven
Energy Inc. prior to the completion of the spin off. The
transaction would be tax-free for its shareholders.
Cenovus Grand Rapids Gets Regulatory Nod
Canadian oil company
Cenovus Energy Inc.
) announced that it has received approval from the government of
Alberta for a new oil sands initiative. The project, christened
Grand Rapids, is located approximately 300 kilometers north of
Edmonton, in northern Alberta. Grand Rapids is expected to have
production capacity of 180,000 barrels per day and will be
developed in multiple phases. The project is anticipated to have
a life of 40 years. Cenovus expects to make a decision on the
timing of development later this year.
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:
Valero Unit Buys Ethanol Plant
Valero Renewable Fuels, a unit of refiner
Valero Energy Corp.
), has purchased a corn ethanol plant in Mount Vernon, Ind. from
Aventine Renewable Energy-Mt. Vernon, LLC. The plant has an
annual production capacity of 110 million gallons and uses
Delta-T technology, similar to the process already in use at
Valero Renewables' ethanol plant in Jefferson, Wis. The Mount
Vernon plant is the 11th corn ethanol plant in Valero Renewables'
system and it's second in Indiana. The addition will give Valero
more than 1.3 billion gallons per year in ethanol production
Imperial Oil to Vend C$855M Assets
Canadian energy explorer
Imperial Oil Ltd.
) has entered into a deal with smaller rival Whitecap Resources
Inc. to divest part of its producing properties in Western Canada
for roughly C$855 million. The to-be-sold properties churned out
approximately 15,000 oil-equivalent barrels per day in 2013. The
transaction - expected to close in May - is part of Imperial
Oil's efforts to concentrate on its oil sands and shale
properties in the region.
McDermott, Petrobras Sign Subsea Deal
Offshore oil and gas-focused engineering and construction
firm, McDermott International Inc. signed a deal to supply its
subsea Lay Vessel North Ocean 105 to the Brazilian state-run
energy giant Petrobras. The vessel, expected to start work during
the third quarter, will be responsible for the installation of
deepwater umbilical and flexible pipelines in the pre-salt area
and the Campos Basin, off the coast of Brazil.
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 will be closely tracking housing sector and durable
orders data plus the crucial GDP report. Energy traders will also
be focusing on developments in Ukraine.
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CHESAPEAKE ENGY (CHK): Free Stock Analysis
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