(June 6 2012) GEONomic Investing.
A triple-digit advance by the Dow Jones Industrial Average ignited generous gains in the energy sector on Wednesday, U.S. stocks posted their best day of 2012 as traders speculated central banks may soon provide additional stimulus to keep the global economy from sliding into recession. Energy stocks led all 10 industry sectors in the S&P 500 higher.
Energy stocks in the S&P 500 (SPX) rose 2.8%, on average. First Solar Inc. (FSLR) jumped 5.3%, Pioneer Natural Resources (PXD) climbed 5.6% and Phillips 66 (PSX) rose 5.5%. The biggest loser was Alpha Natural Resources (ANR) which dropped 5.4%. Dow Components, Exxon Mobil (XOM) and Chevron Corp. (CVX) both advanced by 2.7%.
Battered crude-oil finally gained, with crude for July delivery rising 0.9%, to settle at $85.02 a barrel on the New York Mercantile Exchange. The U.S. dollar lost some of its safe-haven appeal, and declined, adding to dollar-dominated crude oil’s rally. Notably, oil prices finished well off their session’s high of $86.27. Prices retreated following the U.S. Energy Information Administration’s report of a 100,000-barrel decline in U.S. crude supplies for the week ended June 1, below the 1-million-barrel decrease in weekly crude stockpiles predicted by analysts polled by Platts.
At the same time, The EIA reported Inventories of petroleum products climbed much more than expected. Motor gasoline supplies rose by 3.3 barrels, while distillate stocks added 2.3 million barrels last week, analysts had forecast an increase of 500,000 barrels and a rise of 600,000 barrels in distillate stocks, respectively. July gasoline added or 0.2% in Wednesday’s regular session, to $2.69 a gallon and July heating oil rose 4 cents, or 1.5%, to $2.67 a gallon.
On Thursday, the EIA will report data on last week’s natural-gas supplies in storage. Analysts polled by Platts expect data to show an increase of between 53 billion cubic feet and 57 bcf. July natural gas closed down 2.5 cents, or 1%, at $2.42 per million British thermal units, halted a two-session rise.
Energy Companies Moving on Corporate News
Chesapeake Energy Corp. (CHK) advanced 6.5%. According to Bloomberg, the company is in talks to sell its pipelines to Global Infrastructure Partners, including its entire stake in d Chesapeake Midstream Partners LP (CHKM).
Halliburton Co. (HAL) tumbled by 3.9% after the company said it expects rising costs of raw materials used in hydraulic fracturing will impact its second-quarter margins.
The Shaw Group Inc. (SHAW) jumped 5.86% after the company reported that it will invest up to $50.4 million in cash and pay an undisclosed sum to acquire up to 50% of NET Power LLC to acquire its technology relating to a new type of natural gas-fired power plant.
Bank of America Merrill Lynch analysts released a statement today that the recent sell-off , in oil stocks has opened up attractive opportunities, claiming that Hess (HES), Marathon Oil Corporation MRO , Chesapeake Energy Partners, (CHK), Anadarko Petroleum Corp (APC) and Occidental Petroleum Corporation (OXY) offered the best upside potential as many of the downside risks facing those companies are already priced into the stocks.