Oil futures for November delivery rose on Friday after US durable goods excluding transport were reported to have increased 2% in August. Together with transport, orders declined 1.3%.
The update provided a boost for the stock markets, driving up the FTSE 100 and the Dow Jones Industrial Average, which added 1% and 1.85% respectively.
Otherwise, this week’s data was predominantly downbeat, putting pressure on stock and commodity markets.
Initial jobless claims in the US unexpectedly added 12,000, while euro zone PMI (purchasing managers index) slid from 56.2 to 53.8 in September.
This week’s new was dominated by the Federal Reserve’s policy meeting. It was hardly surprising that the interest rates were left unchanged. However, the Fed said that it may bolster the apparently slowing economic recovery with more quantitative easing, also noting the low inflation in the US.
At the end of the week, JP Morgan (NYSE:JPM) projected oil to reach US$90/barrel by the end of 2011. While an improvement over the bank’s previous forecasts, this isn’t too far off from the current price level of just below US$80.
This weeks inventories reports weighed on the prices, showing a further buildup in US crude oil stockpiles.
On Tuesday, The American Petroleum Institute (API) reported a surprising gain of 2.2 million barrels in US stockpiles.
This was followed by a report from the US Energy Department, which said that crude oil supplies increased by 1 million barrels last week, suggesting a lower level of demand in the world’s largest energy consumer.
Crude benefitted from a decline in the US dollar, which hit five month lows against the euro this week. Europe’s single currency rallied after the Ifo institute said that its German business confidence index rose to 106.8, while France’s Q2 GDP growth was revised upwards to 0.7%.
November Brent Crude rose to US$78.80/barrel, while US light, sweet crude for November delivery reached US$76.50/barrel on the New York Mercantile Exchange (NYMEX).
BP (LON:BP) slid from 410 pence to 404 pence. Other blue chip oil and gas producers were on the rise this week.
Fellow supermajor Shell (LON:RDSB) climbed from 1,816 pence to 1,845 pence.
Cairn Energy (LON:CNE) advanced from 428 pence to 459 pence, while BG Group (LON:BG) rallied from 1,082 pence to 1,169 pence and Tullow Oil (LON:TLW) moved up from 1,261 pence to 1,299 pence.
Oil and gas engineering firms followed with Amec (LON:AMEC) rising from 943 pence to 993 pence and Petrofac (LON:PFC) improving from 1,395 pence to 1,411 pence.
Small Cap News
Rockhopper Exploration’s (LON:RKH) flow tests on the potentially world class Sea Lion field in the North Falklands basin ran into some minor problems. Tests on well 14/10-2 were supposed to be carried out over four perforated intervals totalling 77m between 2,403m and 2,566m. However a gun misfire meant only the top two intervals were perforated.
Nautical Petroleum (LON:NPE) and Providence Resources (LON:PVR, ESM:PZQA) told investors that a new exploration prospect, offshore Ireland, may contain up 74 billion cubic feet of gas. The Marlin prospect in the North Celtic Sea Basin is hosted on the same license as the Baltimore heavy oil discovery, and it is located just 10km away from key infrastructure at the producing Kinsale Head gas field.
Petro Matad (LON:MATD) said that the European Bank for Reconstruction and Development (EBRD) will conditionally subscribe for 3.36 million new share sin the company worth a total US$7 million, taking the aggregate amount raised by the company in its September fundraising to US$54 million.
Gulfsands Petroleum (LON:GPX) is one of the top picks on London’s AIM market, according to Arbuthnot Securities oil & gas expert Dougie Youngson. Youngson has upgraded his core valuation to 344p per share in the wake of yesterday’s update on the potential gas discovery in Tunisia and the company’s recent interims.
Western Australia based ADX Energy (ASX: ADX) initial evaluations of the Lambouka-1 well in Tunisia has identified a mean recoverable gas resource estimated to be 309 billion cubic feet, with the potential for significant associated condensate volumes.
Ascent Resources (LON:AST) has added a fourth project in Hungary, having agreed a deal with Winstar Resources (TSX:WIX) to acquire an interest in a 1,990km2 exploration permit. The Igal-II exploration permit is situated to the south east of Lake Balaton, in Central Hungary.
Green Dragon Gas (LON:GDG) has raised US$50m via a convertible bond issue to a Canadian professional pension plan to drill CBM (Coal Bed Methane) gas wells and build infrastructure in China.
Gulf Keystone Petroleum (LON:GKP) is nearly ready to start producing oil from the Shaikan-1 well, just over one year since it discovered oil in the Kurdistan region of northern Iraq. The company is now commissioning its long term test facilities at the Shaikan oilfield.
Regal Petroleum (LON:RPT) has obtained approval from the Government of Romania to extend its rights over the Barlad Block EV-2 by two and a half years. The company will now hold petroleum exploration, development and production rights for the block until March 2013. Regal Petroleum has a 100% WI (working interest) in the license.
Oil volumes at Gulf Keystone’s (LON:GKP) Shaikan oilfield could be ‘several multiples’ higher than the current 4.2 billion barrel (bnbbls) mean estimate, according to Daniel Stewart analyst Richard Nolan.
Xtract Energy (LON:XTR) emerged among the leaders on the Alternative Investment Markets (AIM) today, rallying more than 23% in early trade on news its 50% associate Elko Energy set up a JV (joint venture) with oil major Chevron (NYSE:CVX) in an “excellent outcome” for its shareholders.
Dominion Petroleum (LON:DPL) provided a positive update for its assets in Africa. Notably a Competent Persons Report (CPR) on the wholly owned Tanzania Deep Water Block 7 confirmed a mean prospective resource of 1.1 billion barrels (Bbbl) as the oil case, and 7 trillion cubic feet for (Tcf) gas.
Shares in Sterling Energy (LON: SEY) took a hammering after the group reported disappointing initial results from the first exploration well of the Sangaw North prospect in the Kurdistan region of northern Iraq. Sterling Energy plummeted in opening deals, and by early afternoon was off intitial lows, however still down 40 percent on the day.
Shares in Europa Oil & Gas (LON:EOG) surged more than 30 per cent in early trade as the explorer unveiled a major upgrade to the reserves in place at the West Firsby Field in Lincolnshire. Detailed re-mapping by Merlin Energy Resources and iProdTech has resulted in the P50 remaining reserves figure jumping by 250 per cent to 1.4 million barrels.
Large and Mid Cap News
It appears that Dana Petroleum (LON:DNX) will have to concede defeat in its fight against the hostile £1.7 billion Korean takeover bid, after the £18.00 per share offer was declared unconditional.
Shares in Wellstream Holdings PLC (LON:WSM) soared today after the supplier of flexible tubes for the offshore drilling industry confirmed it has received a number of preliminary approaches regarding a possible offer for the company.