Oil Falters Again, Exxon Fails To Impress

Published on Tuesday, 31 January 2012 17:09 Written by Todd Shriber

New York, January 31^st (TradersHuddle.com) – After trading in a wide range of over $3.40, NYMEX-traded crude settled lower by 30 cents at $98.48 a barrel following speculation of an inventory build and weak Euro Zone unemployment data. Unemployment in the Euro Zone averaged 10.4% last month, the highest level in since 1998, and that number reinforced fears Europe has a long road yet to be traveled before it can be counted on for economic growth.

Concerning inventory data, analysts expect the data to show U.S. crude oil stocks rose by 3 million barrels in the week ended Jan. 27, according to the Wall Street Journal. U.S. oil inventories are already resting at multi-year highs. Natural gas prices plunged 21 cents to $2.50 per 1,000 cubic feet in New York after the Energy Information Administration said U.S. production of the commodity is at record highs. That report sent the United States Natural Gas Fund (NYSE: UNG) down 7% on volume that was nearly double the daily average.

In other oil news, Mexico, the third-largest exporter of crude to the U.S., said it has hedged prices for its 2012 oil exports at $85 per barrel. Mexico exported about 1.34 million barrels of crude a day in 2011 with about 85% of that going north of the border to the U.S., Bloomberg reported.

Ecuador, the smallest OPEC member, said today that U.S. and Argentine companies are investing $1.7 billion to help the country boost oil production by 40,000 barrels a day. Ecuador exports just over 500,000 barrels of crude per day.

Looking at oil equities, Dow component Exxon Mobil (NYSE: XOM), the largest U.S. oil company, slipped by more than 2% after saying its fourth-quarter profit rose to $9.4 billion, or $1.97 per share, from $9.25 billion, or $1.85 per share, a year earlier as revenue increased 15.6% to $121.6 billion. Profit at Exxon’s exploration and production business increased 18% while the company’s downstream operations saw profits fall 63%.

The U.S.-listed shares of BP (NYSE: BP), Europe’s second-largest oil company, soared 4% on volume that was roughly 3.5 times the daily average after a federal judge ruled Halliburton (NYSE: HAL) is not exempt from paying punitive damages and civil penalties related to the 2010 Gulf of Mexico oil spill. However, the judge did rule that Halliburton, the world’s second-largest provider of oilfield services, does not have to pay pollution claims stemming from the spill. Shares of Halliburton closed slightly on the day.

Ahead of earnings reports later this week from some of its key constituents, the iShares Dow Jones US Oil Equipment Index Fund (NYSE: IEZ) was slightly lower on the day and continues to meander just below its 200-day line. A move above $58 might confirm a breakout for this ETF.