Surprise Decline in Crude Supplies Sends Oil Stocks Higher
On Wednesday, the European Central Bank provided 489 billion euros in three-year loans, the most ever in a single operation. The move failed to improve confidence in the euro, and the U.S. dollar (NYSE:UUP) climbed higher. Several commodities (NYSEARCA:RJI) declined due to the strength in the dollar. However, oil (NYSEARCA:USO) prices climbed higher after the latest inventory report.
In its weekly report, the Energy Department’s Energy Information Administration said crude supplies dropped by 10.6 million barrels (3.2 percent) to 323.6 million barrels. This is 5 percent below the levels seen last year in the same period. Furthermore, analysts were only expecting a decline of 2.25 million barrels for the week. Despite the stronger dollar, crude prices jumped 1.58 percent to nearly $99 per barrel.
Here’s a look at how oil related companies traded on the news:
Exxon Mobil Corp. (NYSE:XOM): Exxon shares jumped 1.5 percent in afternoon trading. Measuring by market capitalization, the oil giant is the world’s largest company. According to a British newspaper, Exxon may be looking to purchase Kurdistan focused Gulf Keystone Petroleum. Kurdistan is estimated to hold 40 billion barrels of oil. Shares of Exxon have gained 13 percent year-to-date.
Chevron Corp. (NYSE:CVX): Chevron shares increased nearly 2 percent after the oil inventory report. Shares currently trade near $105, which is just below its 52-week high of $110. Earlier this month, prosecutors in Brazil announced they are seeking more than $10 billion from Chevron and Transocean (NYSE:RIG) due to an oil spill off Rio de Janeiro. Shares of Chevron have gained 15 percent year-to-date.
ConocoPhillips (NYSE:COP): Shares of ConocoPhillips closed more than 1 percent higher on Wednesday. Interestingly, the oil giant is one of Warren Buffett’s (NYSE:BRKA) largest energy investments. As of the end of the third quarter, Buffett held more than 29 million shares of COP, which have gained 3.5 percent year-to-date.
BP (NYSE:BP). Despite the inventory report, shares of BP closed .36 percent lower on Wednesday. Due to economic challenges, the company announced it is closing its solar operations. Sam Wilkinson, senior market analyst of IMS Research explained, “Rapid manufacturing expansion have coincided with a slowdown in the growth of global demand. The result has been intense competition and a fierce price war, and not enough demand to support all of the industry’s hundreds of suppliers.” Last week, First Solar Inc. (NASDAQ:FSLR) cut sales and profit estimates as more companies enter the market. Shares of BP have dropped 5.5 percent year-to-date.