Greek Woes Plague Oil Prices

Published on Monday, 30 January 2012 16:18 Written by Todd Shriber

New York, January 30^th  (TradersHuddle.com) – It was a familiar refrain for oil prices on Monday as concerns about the Euro Zone’s sovereign debt crisis plagued futures, sending NYMEX-traded crude lower by 78 cents a barrel to $98.78. Brent crude for March delivery fell 71 cents to settle at $110.75 a barrel. Further speculation that Iran is planning to halt oil exports to the European Union and a strengthening dollar also weighed on crude futures.

Not surprisingly, there appear to be significant difficulties in finalizing a package that will facilitate a Greek debt agreement and that was just one more issue for oil futures to contend with on Monday. Germany, the Euro Zone’s largest economy, and Greece, perhaps the most problematic of the PIIGS, just cannot seem to find common ground on a possible debt deal.

It was another mixed day for oil equities. Dow component Exxon Mobil (NYSE: XOM) announced it will sell its Japanese downstream operations to TonenGeneral Sekiyu K.K. For $3.9 billion. Exxon Mobil, the largest U.S. oil company, will retain a 22% stake in the venture with TonenGeneral, but the deal essentially means Exxon has almost no noteworthy presence in Japan, the world’s third-largest economy. Exxon reports fourth-quarter earnings before the bell on Tuesday.

Shares of Chevron (NYSE: CVX) continue a recent tailspin that has seen the second-largest U.S. oil company drop by over 3% in the past week. The stock has now careened below its 20- and 50-day moving averages. Chevron’s Kazakh venture, TengizChevroil, said its oil output dropped 0.4% in 2011 from 2010’s levels. In added international problems for Chevron, Brazilian prosecutors are ramping up their case against Chevron and Transocean (NYSE: RIG) related to a November 2011 oil spill off Brazil’s coast.

Speaking of Transocean, the world’s largest provider of offshore drilling services, was down about 2.7% after the Wall Street Journal ran a somewhat bearish article on the company. Shares of Transocean have plunged almost 40% in the past year and next support for the stock could around $43 where the 20-day and 50-day moving averages converge.

Shares of small-cap independent oil producer Comstock Resources (NYSE: CRK) were among the noteworthy winners on the day, jumping over 5% after the company said it had 32 million barrels of oil reserves at the end of last year, a 661% increase from 2010. Comstock said oil now makes 15% of its total reserves compared to just 2% in 2010.

The present value, using a 10% discount rate, of the future net cash flows before income taxes of the proved reserves (the "PV 10 Value") was approximately $1.5 billion, using average first of the month 2011 prices of $4.18 per Mcf for natural gas and $92.93 per barrel for oil, according to a statement issued by Comstock.