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BP, Shell, BG Group, Amec and Petrofac rise during week, brent steady at $76

4th Sep 2010, 5:13 pm BP, Shell, BG Group, Amec and Petrofac rise during week, brent steady at $76

Oil prices were roughly at the same level as at the start of the week despite a rally in global stock markets, which saw the FTSE 100 advance 4.3% over the past four trading days, while the Dow Jones Industrial Average in the US surged 2.9%.

The markets wee boosted by better than expected US non-farm payrolls data, which was released by the Labor Department on Friday, showing a smaller than expected decrease of 54,000 in payrolls. As was projected, the unemployment rate rose from 9.5% to 9.6%.

Meanwhile, the private sector added 67,000 jobs in August, more than double the expected increase of 30,000.

Prior to that, US initial jobless claims were reported to have fallen 6,000 to 472,000, which was a smaller than expected decline. However, the markets shook off the data and equities in the US closed in the positive.

Oil prices usually track movements in share prices, which serve as an indicator of the strength of the economy and energy demand. However, further gains in crude oil stockpiles and the end of the summer driving season in the US, which translates into lower gasoline demand, weighed the oil prices down.

On Wednesday, the US Energy Department said that crude inventories added 3.4 million barrels last week reflecting a decline in demand in the world’s largest energy consumer, while energy information provider Platts expected a gain of 1.9 million barrels. According to the report, gasoline stockpiles declined by 200,000 barrels, while distillates, which include diesel and heating oil, shed 700,000 barrels.

In other news, a Reuters survey showed that supplies from OPEC (Organization of Petroleum Exporting Countries) declined to the lowest since November 2009, averaging 26.83 million barrels per day for the 11 members with output targets compared to 26.95 million in July.

Total supplies stood at 29.09 million barrels per day. The decrease was attributed to lower output from Nigeria and Iraq due to disruptions.

The oil cartel slashed its output targets by 4.2 million barrels in late 2008 in response to a substantial fall in oil prices.

October Brent Crude stood at US$76.62/barrel, while US light, sweet crude for October delivery was at US$74.45/barrel.

Blue chip oil and gas producers were mixed. BP (LON:BP) rose from 379 pence to 400 pence, while fellow supermajor Shell (LON:RDSB) rallied from 1,673 pence to 1,753 pence. BG Group (LON:BG) followed, rising from 1,069 pence to 1,092 pence

Tullow Oil (LON:TLW) declined from 1,211 pence to 1,158 pence and Cairn Energy (LON:CNE) inched lower from 466 pence to 460 pence.

Amec (LON:AMEC) surged from 900 pence to 946 pence, while another oil and gas engineering firm Petrofac (LON:PFC) rose from 1,387 pence to 1,427 pence.

Small Cap News

Gulf Keystone Petroleum (LON:GKP) has begun work on the Shaikan-3 appraisal well, which will test shallow Cretaceous age intervals for producible oil volumes. The well will be drilled to 1,100m, near the Shaikan-1 well - which discovered the giant Shaikan oil field last August.

US operating oil and gas junior Caza Oil & Gas (LON:CAZA) has commenced scheduled drilling on the initial test well at its Windham (Wolfberry) prospect in Upton County, Texas.

Leni Gas and Oil (LON:LGO) has raised an additional £800,000, with the issue of 40 million new shares to institutional investors at 2 pence per share. Back in July, the company raised £1.5m to fast-track its Spanish assets.

Baobab Resources’ (LON:BAO) ongoing step-out drilling at the South Zone of the Tete project has intersected substantial widths of titanium and iron bearing rock (magnetite-ilmenite) in seven of the eight RC drill holes completed to date.

Xcite Energy (LON:XEL) is wrongly perceived to be an exploration play, whereas in reality it is a development story, according to Arbuthnot Securities oil and gas analyst Dougie Youngson. In a note entitled “Ready for Action”, Youngson looked ahead to Xcite’s upcoming work programme at the Bentley field, after the North Sea oil development company finalised a £5.8m financing last week.

Victoria Oil & Gas (LON:VOG) has raised £9.2m through an equity placing, priced at 2.5p per share, to help deliver its first production from its onshore wells in Cameroon by December 2010.

Petro Matad (LON:MATD) told investors that it has ‘spudded’ its second exploration well on Block XX in Eastern Mongolia. The well will follow-up the Davsan Tolgoi-1 (DT1) oil discovery.

Gulfsands Petroleum (LON:GPX) said this morning that drilling at its Lambouka-1 well off the coast of Italy continued to plan last week. The 8  1 / 2 section was drilled to a depth of 2,785 metres and through the Aboid Formation - the main target section.

Gulf Keystone Petroleum (LON:GKP) is likely to become a takeover target due to its “astonishing reserve potential”, according to research by Daniel Stewart’s oil and gas expert Richard Nolan.

Large and Mid Cap News

Embattled oil and gas supermajor BP (LON:BP) said the Gulf of Mexico clean-up costs increased US$2 billion over the past month, now rising to a total US$8 billion.

China’s thirst for energy resources has continued with an increased focus on domestic supplies of gas, Green Dragon Gas chairman Randeep Grewal said today. In the company’s interim results, Green Dragon told investors that it remains on-track to meet its ‘aggressive targets’ in 2010, after it increased gross profit by 44% in the first six months. The Chinese CBM (Coal Bed Methane) gas producer increased revenues by 15% to US$21.5m.

BP (LON:BP) has agreed a US$363m deal to sell its interests in two Malaysian petrochemical businesses to Malaysia’s state-owned oil company PETRONAS.

Oil and gas major Tullow Oil (LON:TLW, PINK:TUWOY) has entered into an agreement to acquire a 50% operating interest in six licences held by oil and gas minnow Africa Oil (TSX-V:AOI).

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