Oil Futures, Stocks Ebb Lower

Published on Tuesday, 24 January 2012 17:31 Written by Todd Shriber

New York, January 24^th  (TradersHuddle.com) – The European Union’s ban on Iranian oil imports and a lower global economic growth estimate from the International Monetary Fund combined to weigh on oil futures on Tuesday. Those headlines sent NYMEX-traded West Texas Intermediate gave up 63 cents to close at $98.95 a barrel while Brent crude lost 55 cents to finish at $110.03 a barrel.

While Iran may restart negotiations with the West regarding its nuclear program, a move that would open the door for Iranian crude exports to once again flow to the West, the IMF is still forecasting global economic growth of just 3.3% this down from the September estimate of 4% and below the 2011 rate of 3.8%. Expectations for tepid global growth would presumably ding demand for crude, sending prices lower.

Oil equities were mixed to slightly lower on the day. Dow component Exxon Mobil (NYSE: XOM), the largest U.S. oil company, was down slightly on the day despite news that PDVSA, Venezuela’s state-run oil company, will detail its payment plan to U.S. oil giant later this month related to previously seized assets in the South American country. Venezuelan officials said they do not expect a court decision on a related matter with ConocoPhillips (NSYE: COP) in 2012.

Speaking of ConocoPhillips, the third-largest U.S. oil company, closed slightly higher on the day. ConocoPhillips reports fourth-quarter results before the bell tomorrow. Following Halliburton’s (NYSE: HAL) post-earnings decline on Monday, rival Baker-Hughes (NYSE: BHI), a stock that has been in a tailspin for several months, delivered decent earnings but still closed lower. Shares of Baker Hughes are now down more than 16% in the past 90 days.

Investors should note that in addition to ConocoPhillips, Wednesday would be a brisk day in terms of earnings reports from big oil companies. Hess (NYSE: HES) and Occidental Petroleum (NYSE: OXY), the fourth-largest U.S. oil company, both report before the bell. Noble (NYSE: NE) and Murphy Oil (NYSE: MUR) also step into the earnings confessional on Wednesday.

On the natural gas front, the United States Natural Gas Fund (NYSE: UNG) gave back a silver of Monday’s big gain, falling almost 0.2% on volume that was about 2.5 times the daily average. The First Trust ISE-Revere Natural Gas Index Fund (NYSE: FCG), the ETF that is home to gas producers such as Chesapeake (NYSE: CHK), tumbled 1.2% on below average turnover.

There was some chatter among traders today that President Obama might make supportive comments on natural gas in his State of the Union address tonight, but that speculation obviously did not translate into gains for nat gas futures and equities. UNG’s chart is still pitiful and the ETF is still 42% below its 200-day moving average.