Crude Oil rose approximately 1% this morning to trade above $72.50 - the move has largely been fed by strengthening equity markets, lead by the Nikkei which rose almost 2%, and then Europe, as the FTSE 100 hit a 14 month high and the German Dax climbed nearly 1.5%. The oil market also found some support from a slightly weaker dollar.
On London’s Intercontinental Exchange, the West Texas Intermediate contract has gained more than one percent with the November futures trading at $72.60.
The US supply picture has dominated recent themes in the oil market. On the one hand, Crude inventories unexpectedly fell almost 1m barrels last week, however gasoline distillates rose three times more than anticipated.
On the face of it, many investors will still be left to ponder the ongoing US supply picture.
Investors who have been following the supply data will now assess the relative strength of the American consumption outlook. Against a backdrop of high unemployment and a weakening dollar, many commentators believe the outlook for the oil market remains clouded.
The week ahead sees the American Q3 reporting season step up a gear with several major corporation’s scheduled to release their interim results. The next few trading sessions may provide more clarity and decisiveness to an Oil market which has been stubbornly stuck in range for the past couple of months.
Major multinational companies such as JP Morgan (NYSE: JPEL), Goldman Sachs (NYSE: GSDO), General Electric (NYSE: GE) and Southwest Airlines (NYSE: LUV) all report this week. The new data and forthcoming projections will help Investors gauge the overall perception of America’s recovery and any resulting movement in equity markets will also provide stimulus to a range bound crude oil.
In a relatively strong equity market, London’s Oil & Gas stocks have enjoyed a positive start to the day, Cairn Energy (LSE: CNE) and Tullow Oil (LSE: TLW) were among the strongest performers rising nearly 2%. British Petroleum (LSE: BP.) advanced 1½%, while fellow ‘super-majors’ BG Group (LSE: BG.) and Royal Dutch Shell (LSE: RDSB) rose 1%.
Petrofac (LSE: PFC) were the only FTSE100 oil and gas stocks in negative territory on Monday morning, slipping around 1% to trade at £9.97.
In the FTSE 250, Dragon Oil (LSE: DGO) advanced almost 2%, while Heritage Oil (LSE: HOIL) and Dana Petroleum (LSE: DNX) both gained 1%.
Newfoundland operating Enegi Oil (AIM: ENEG) surged 60% to trade at 25p per share, this latest move extends Enegi’s most recent run which has seen the explorer rise from around seven pence at the start of the month since Enegi announced it would resume production at its Garden Hill South project.
A few other junior equities recorded double-digit gains this morning, Kazakhstan and FSU operating junior explorer Caspian Holding (AIM: CSH) extended Friday’s strength, advancing a further 27%. Chariot Oil & Gas (AIM: CHAR) rose more than 20% and Philippines operating Forum Energy (AIM: FEP) gained around 19%.
European operating explorer Mediterranean Oil & Gas (AIM: MOG) also made strong gains, rising nearly 7%. North American based explorer Nighthawk Energy (AIM: HAWK) and European focused oil and gas developer Ascent Resources (AIM: AST) both followed last weeks strength by rising more than 6% this morning.
Gold Oil (AIM: GOO) and Leni Oil & Gas (AIM: LGO) advanced a further 5% on Monday, South American focused Pan Andean Resources (AIM: PRE) rose 4% and Meanwhile Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) rose 2%