Oil Price - Feb 9

[dan_s]

What’s Behind The Energy Stock Selloff?
Nick Cunningham, Oilprice.com•February 8, 2018: https://finance.yahoo.com/news/behind-e ... 00309.html

Despite global economic indicators that are generally positive for oil demand, the price of crude oil is falling in lockstep to the stock market selloff. The only fundamental reason that I can see for the drop in oil prices is the ~5% increase in the U.S. dollar. Demand for products refined from crude oil is expected to surge in the 2nd quarter.

In the article above, Nick points to poor Q4 results by Exxon and BP as the reason for the overall energy sector selloff. In my opinion, the energy sector is just being sucked into the "black hole" of an overdue market correction. To me it just looks like fund managers are "throwing the baby out with the bath water". PXD reported outstanding q4 results after the market closed on February 6 that crushed the First Call EPS estimate and the stock is down $7/share from where it closed on 2/6. Good fundamentals don't seem to matter when investors are running for the exit in lock step.

Some analysts point to Wednesday's EIA report, but everyone should know that Q1 is the low period for crude oil demand and that a surge in U.S. oil production was expected because upstream companies pushed hard to complete DUC wells before year-end. As I have posted here many times, this is the time of year when refiners MUST build up their crude oil inventories.

Natural gas trading below $3 makes no sense at all to me since gas in U.S. storage has plunged to 503 Bcf less than last year at this time and 393 Bcf below the five-year average of 2,471 Bcf. Plus, we have a parade of winter storms moving across the Great Lakes area that should push storage to the bottom of the 5-year average in March.

All oil, gas and NGL product markets are much tighter than they were a year ago.