Different Catalysts Same Results For Oil

Published on Thursday, 17 May 2012 17:04 Written by Todd Shriber

New York, May 17^th (TradersHuddle.com) – A different day, a different reason, but the same result for oil and that was another down move. While crude has been primarily pressured by waves out of the Euro Zone in recent weeks, mediocre U.S. economic data took its turn hampering oil futures on Thursday. NYMEX-traded crude for June deliver lost 11 cents, or 0.1%, to settle at $92.71 per barrel. That’s good for the tenth loss in the past 11 trading days.

There was simply no relief for oil once again as crude could not make headway even with the benefit of  a weaker dollar. The PowerShares DB US Dollar Index Bullish (NYSE: UUP) finally closed lower, though not by much.

In economic news, the Federal Reserve Bank of Philadelphia said its manufacturing index fell to -5.8 in May from 8.5 in April. Economists expected a reading of 10. Readings below zero indicate contraction. The Conference Board said its index of leading economic indicators dropped 0.1% in April to to 95.5 following 0.3% increase in March and a 0.7% rise in February. Economists expected a 0.1% increase in April. The number of weekly jobless claims came in at 370,000, which matched the previous week’s reading. Economists were expecting a decline to 367,000 new claims.

While the jobless claims number was not particularly bad, it wasn’t great either and the Philly Fed and leading indicators numbers were downright disappointing. Hence, oil fell once again, but maybe the good news is that support at $92.50 per barrel has not violated.

On another down day for U.S. equities, the fifth consecutive loss for the S&P 500, oil equities were mixed and that’s the rosy view of things. Exxon Mobil (NYSE: XOM), home to a weakening chart, dealt with a small loss while rival Chevron (NYSE: CVX) eked out a small gain and remains above the important $100 mark.

Chesapeake Energy (NYSE: CHK), the second-largest U.S. natural producer, fell 3.5% again on strong volume and again, we’re talking about a multi-year closing low for the downtrodden company. Press reports out today indicated Chevron is the most likely buyer for Chesapeake should the company be forced into a sale. That scenario cannot be ruled out if financier Carl Icahn becomes active regarding a stake in Chesapeake.

South American oil giants were far worse than many of their U.S. counterparts. Colombia’s Ecopetrol (NYSE: EC), one of the best oil stocks for much of this year, plunged 3.4% on above average turnover while Brazil’s Petrobras (NYSE: PBR) also lost more than 3% on heavy trade. The average analyst price target on Petrobras is almost $38 and the shares are trading for just over $19, indicating analysts might do well to take the knife to their targets on the Brazilian oil giant.