Crude Below $100, Oil Equities Mixed

Published on Friday, 20 January 2012 17:09 Written by Todd Shriber

New York, January 20^th (TradersHuddle.com) – Capping off a glum week for oil futures, NYMEX-traded crude for February delivery slid $1.93 to close at $98.46 a barrel while Brent crude gave up $1.57 to close at $109.85 a barrel. NYMEX-traded futures had been finding support at $100, but the sixth loss in seven days proved to be too much to overcome as that important technical level was violated.

Again it was Europe looming large in the oil equation. Oil traders are perhaps worried about what the next step is for European policymakers in terms of the Euro Zone’s sovereign debt crisis. European Union diplomats scheduled to meet Monday are expected to approve Europe's toughest measures yet to isolate Iran economically due to its nuclear program, according to the Wall Street Journal. Mere speculation that major developed countries are willing to restart nuclear talks with Iran eased oil supply concerns, but weighed on spot prices.

On the equities side, it was a mixed bag as Chevron (NYSE: CVX) closed slightly lower despite the Dow’s almost triple-digit gain. On the other hand, Exxon Mobil (NYSE: XOM) was up by half a percent.

Shares of Schlumberger (NYSE: SLB), the world’s largest oilfield services provider, jumped over 1% after the company said its fourth-quarter profit rose 36% to $1.41 billion, or $1.05 a share, up from $1.04 billion, or 76 cents a share, a year earlier. On an adjusted basis, the company earned $1.11 compared with 85 cents a year earlier. Schlumberger said it’s planning to spend $4.5 billion this year, up from $4 billion last year.

On a cheery note, Schlumberger said its Libyan activities resumed in the fourth quarter. The company’s business there stalled following the onset of political violence in February 2011. Before that, OPEC member Libya was Africa’s third-largest oil producer.

Speaking of oil services stocks, the next two weeks are heavy on earnings reports from this group. Halliburton (NYSE: HAL), the world’s second-largest oilfield services provider, reports on Monday and Baker Hughes (NYSE: BHI) reports on Tuesday. Keeping an eye on the iShares Dow Jones US Oil Equipment Index Fund (NYSE: IEZ) might be a good idea over the next 10 days.

Believe it or not, natural gas futures got a lift from decade lows on Friday and the United States Natural Gas Fund (NYSE: UNG) was higher by almost 1.2%. While nat gas futures were up just 2 cents on the day, traders scurried in and out of UNG, which saw turnover of more than twice the average daily volume.

Chesapeake Energy (NYSE: CHK), the second-largest U.S. natural gas producer, bounced off a 52-week low today to gain 1.35%, a move that was probably helped by one Web site suggesting the company may be a takeover target. Volume in shares of Oklahoma-based Chesapeake was better than 50% above the daily average.