Iran Issues Lift Oil Prices...Again; Natural Gas Slammed…Again

Published on Thursday, 26 January 2012 18:00 Written by Todd Shriber

New York, January 26^th  (TradersHuddle.com) – In what is becoming a common theme in the oil market, blustering by OPEC member Iran is lending a hand to crude’s upside. Comments from Iran today that it’s mulling an immediate halt sales of crude to European Union countries lifted NYMEX crude 30 cents to $99.70 a barrel. Earlier in the session, the March contracted flirted with $101.40. Brent crude added almost $1 to settle at $110.79.

The European Union has already agreed to sanctions on Iranian exports, namely crude oil, as the country continues to pursue a nuclear agenda that is considered objectionable by the West. Oil Futures retreated a bit after the International Energy Agency said strategic inventories could be released in the event of supply disruptions caused by Iran.

U.S. economic data was also supportive of a move higher by oil. The Commerce Department said December durable goods orders rose 3%, topping the 2% increase economists expected. The Conference Board’s index of U.S. leading indicators climbed in December for a third consecutive month, rising 0.4% after a 0.2% increase in November. Economists expected a 0.7% increase in December.

Looking at oil equities, Murphy Oil (NYSE: MUR) was one of the big winners on the day, adding 2.1% on volume that was roughly triple the daily average after the company’s  CEO commented in an interview with Bloomberg that Murphy is considering a spinoff of its retail operations and that the company will scale back natural gas production. Spinning off downstream operations has become common in the oil industry due to weak refining margins. In 2011, Marathon Oil (NYSE: MRO) spun off its downstream operations and ConocoPhillips (NYSE: COP) will complete its downstream spinoff next quarter.

Shares of Anadarko Petroleum (NYSE: APC) fell almost 2.2% despite news of an oil discovery in Brazil’s Campos Basin. The news probably didn’t help the stock because Anadarko is shopping its Brazilian business, though today’s headlines could make Anadarko’s business in the South American country more attractive to potential suitors.

The bounce in natural gas futures that we reported on earlier this week appears to have been short-lived as the U.S. Natural Gas Fund (NYSE: UNG) plunged 5.3% today on volume that was almost triple the daily average. Chesapeake Energy (NYSE: CHK) and Range Resources (NYSE: RRC) were each slammed by more than 6%.

Looking ahead to Friday, Dow component Chevron (NYSE: CVX), the second-largest U.S. oil company, reports fourth-quarter results before the bell. Chevron previously said its fourth-quarter numbers will lag its third-quarter results, but investors should be listening for any update on potential fines and legal penalties stemming from the Brazilian spill along with an update on Chevron’s Nigerian operations.

Should Chevron make bullish comments about oil production and announce plans to reduce gas output, that might be enough to support the stock over the next several days.