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Oil recovers on bullish EIA inventories report, energy stocks mixed in London

11th Mar 2010, 2:24 pm Oil recovers on bullish EIA inventories report, energy stocks mixed in London

Crude prices recouped their early losses in mid afternoon today, supported by an inventories update from the US Energy Information Administration (EIA), which reported a surprisingly low increase of 1.4 mmbbls (million barrels) in oil inventories a day after API (American Petroleum Institute) said crude stockpiles in the US added 6.5 million barrels, while a smaller increase was expected. The data also signalled a sixth straight week of expansion in oil inventories.

At the same time, EIA said that gasoline stockpiles and distillates, which include heating oil, were down fell 2.9 million barrels and 2.2 million barrels respectively to signal higher demand.

Oil prices were pressured by an update from China, which showed an increase in the world’s largest energy consumer’s inflation rate to an annualised 2.7% in February, raised concerns about the possibility of further monetary policy tightening that has already led to significant reductions in lending, curbing economic growth.

Meanwhile, OPEC (Organization of Petroleum Exporting Countries) upped its demand forecast for the current year yesterday, projecting the global consumption to grow by an additional 0.9 mmbbls/d (million barrels per day) to 85.24 mmbbls/d provided that the ongoing economic recovery firms.

April Brent Crude recaptured the US$80/barrel mark, while US light, sweet crude was at US$81.74/barrel.

Blue chip oil and gas producers were mixed. Cairn Energy (LSE: CNE) led the pack with a 1% gain. Shell (LSE: RDSB) was flat, while fellow supermajor BP (LSE: BP) rose marginally. BG Group (LSE: BG) and Tullow Oil (LSE: TLW) lost nearly 1%.

Oil and gas engineering firms did well as Petrofac (LSE: PFC) added 3%, while peer Amec (LSE: AMEC) tacked on less than 1%.

Premier Oil (LSE: PMO) was the top performer among the midcaps, climbing 2% after reporting an oil discovery in the North Sea. Salamander Energy (LSE: SMDR) and Soco International (LSE: SIA) also did well with gains of 1.3%.

Dana Petroleum (LSE: DNX) was flat, while Heritage Oil (LSE: HOIL) rose marginally and Dragon Oil (LSE: DGO), JKX Oil & Gas (LSE: JKX) and Melrose Resources (LSE: MRS) slipped 1.5%, 2% and 3% respectively.

Wood Group (LSE: WG) rose marginally, while fellow services company Wellstream Holdings (LSE: WSM) added 2.7%.

Energy investor Xtract Energy PLC (AIM: XTR) and EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) led the juniors, advancing 9% and 5% respectively.

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