Oil Gets A Lift As EU Moves To Ban Iranian Imports

Published on Monday, 23 January 2012 18:33 Written by Todd Shriber

New York, January 23^rd (TradersHuddle.com) – Oil futures snapped out of their funk as policymakers from the European Union agreed to ban Iranian imports after the OPEC member again threatened to close the Strait of Hormuz. A weaker dollar and meetings in Europe to move toward a solution for the continent’s sovereign debt woes were also constructive to higher crude prices. West Texas Intermediate for February delivery gained $1.25 to close at $99.58 per barrel while Brent March crude gained 72 cents to close at $110.58 a barrel.

Natural gas futures were also in rally mode for the first time in months after Chesapeake (NYSE: CHK), the second-largest U.S. natural gas producer behind Exxon Mobil (NYSE: XOM), said it will cut the number of rigs it has drilling for natural gas prices due to soft prices. Oklahoma-based Chesapeake had 75 gas rigs operating in 2011 and that number has already fallen to 47, but the company is planning to cut that figure in half to 24.  Shares of Chesapeake gained 6.3% on volume that was more than twice the daily average.

Speaking of downtrodden energy stocks that were on the move today, American depositary receipts for Petrobras (NYSE: PBR), Brazil’s state-controlled oil company, added 4.3% also on better than twice the average daily turnover after the company said Maria das Gracas Foster will replace Jose Sergio Gabrielli as CEO of the world’s fifth-largest oil company. Petrobras has been one of the worst performing major oil stocks in the world over the past two years, being outperformed by even BP (NYSE: BP).

Shares of ConocoPhillips (NYSE: COP), the third-largest U.S. oil company, closed fractionally lower after the stock was downgraded to "sell" by UBS. The bank opined that Conoco’s plans to spin-off its downstream business could impair the valuation and that the E&P Company may face "low organic free cash flow limiting future buybacks without asset sales & potential risk to dividend/growth in the event of a cyclical oil price pullback."

Apache (NYSE: APA) gained over 1.6% after the independent oil and gas producer said it will acquire Cordillera Energy Partners III for $2.85 billion in cash and stock to bolster its reserves in the Anadarko Basin in Oklahoma and Texas. The deal, which will add to Apaches earnings this year, will give Apache access to 14,000 new potential drilling locations in the Anadarko Basin along with proved reserves of 71.5 million barrels of oil equivalent and current production of 18,000 barrels per day, according to a statement.

BP (NYSE: BP) and Anadarko Petroleum (NYSE: APC) were both mentioned in M&A news as well. Over the weekend, the Sunday Times of London reported BP may be a suitor for Cove Energy. Cove has been on the market since making a major natural gas find off the coast of Mozambique.

The Houston Business Journal reported Anadarko has agreed to make a $1.6 billion provisional investment in Rockhopper, a U.K.-based explorer that has found as much as 700 million barrels of oil off the coast of the Falklan Islands.

Halliburton (NYSE: HAL) was one of the standouts on the downside. The world’s second-largest provider of oilfield services slid 2% despite a 50% jump in fourth-quarter profits, as investors remain concerned about the company’s natural gas exposure.