Market Summary:
US stocks snapped a three-day losing streak on Thursday as petroleum-linked shares rebounded, shrugging off another fall in oil prices, according to channelnewsasia
Analysts said the market was primed for a technical bounce after the S&P 500 lost 2.1 per cent in the prior three sessions. Yet stocks still finished well below their session peaks.
The Dow Jones Industrial Average rose 82.45 points (0.47 per cent) to 17,574.75. The broad-based S&P 500 added 4.61 points (0.23 per cent) at 2,052.23, while the tech-rich Nasdaq Composite Index climbed 22.31 points (0.44 per cent) to 5,045.17.
Oil prices sank to fresh multi-year lows, but Dow member Chevron rose 1.9 per cent and ConocoPhillips gained 1.6 per cent after both cut their 2016 capital budgets by about 25 per cent.
“You have a day when the market didn’t correlate with energy,” said Art Hogan, chief market strategist at Wunderlich Securities. “That caught a lot of people by surprise.”
Crude-oil futures have been facing severe headwinds since last year, when prices for the U.S. and global benchmarks shed more than half their value from the highs seen in June 2014. Now, crude oil faces another stunning unraveling, according to market watch
The commodity has already lost a third of its value in 2015, staging what seems like a relentless drop toward multiyear lows.
Oil Stocks News Update: Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), Chesapeake Energy Corporation (NYSE:CHK), Whiting Petroleum Corp (NYSE:WLL), Kinder Morgan Inc (NYSE:KMI)
On Thursday, Shares of Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), lost -5.40% to $4.73, after ratings agency Moody’s (MCO) downgraded all ratings for the company to Ba3 from Ba2.
The firm also placed the ratings on review for further possible downgrades.
“These rating actions reflect Petrobras’ elevated refinancing risks in the face of deteriorating industry conditions that make it more difficult to raise cash through asset sales,” Moody’s said.
The move comes amid political upheaval in Brazil as the country’s supreme court halted impeachment proceedings against President Dilma Rousseff yesterday for at least a week.
Petrobras has had its own image problems of late as it has been the subject of an ongoing corruption investigation. Rousseff had formerly been on Petrobras board.
“Fiscal and economic activity indicators continue to sharply deteriorate with no clear sign of when they will bottom out,” Moody’s said, according to CNBC. “The initiation of impeachment proceedings against the president in early December . . . leaves very little chance of tackling the worsening medium-term fiscal trends.”
Petróleo Brasileiro S.A. Petrobras operates as an integrated energy company in Brazil and internationally.
Shares of Chesapeake Energy Corporation (NYSE:CHK), inclined 2.01% to $4.56, during its last trading session.
Crude oil prices settled under $37 a barrel on Thursday for the first time since 2009, before the Great Recession. Earlier, the Organization of Petroleum Exporting Countries reported its highest monthly production levels in three years. Production rose by 230,100 barrels a day in November. West Texas Intermediate crude oil fell 1% to $36.80 a barrel.
Since last Friday morning, crude oil prices have tumbled 8%, while stocks have fallen 1.4%.
Chesapeake Energy Corporation produces oil and natural gas through acquisition, exploration, and development of from underground reservoirs in the United States.
Shares of Whiting Petroleum Corp (NYSE:WLL), inclined 3.16% to $13.05, during its last trading session.
Oil prices dipped again Thursday in intraday trading after a report from the Organization of the Petroleum Exporting Countries indicated that demand for its crude was lower than previous estimates, though the report also trimmed 2016 projections for supply from outside the group. Brent crude, the global price benchmark, was down 0.5% at $ 39.91 a barrel.
Oil prices continue to be pressured by OPEC’s decision last week to keep its spigots wide open despite a global glut of crude.
Oil is just one commodity whose prices have been sliding, highlighting weakness in global demand. That leaves the U.S. caught between low energy prices that could boost the economic expansion and international headwinds that could upend it.
Whiting Petroleum Corporation, an independent oil and gas company, acquires, explores, develops, and produces crude oil, natural gas liquids, and natural gas in the Rocky Mountains and Permian Basin regions of the United States.
Finally, Shares of Kinder Morgan Inc (NYSE:KMI), ended its last trade with 1.25% gain, and closed at $17.02.
On Tuesday, energy giant Kinder Morgan declared a plan to slash its quarterly dividend to 12.5 cents from 51 cents. And if the commodities crush continues, one analyst says a slew of other companies may find themselves in a similarly tight position, according to CNBC
Christopher Sighinolfi of Jefferies said Kinder Morgan is representative of energy companies that have taken a fall from crumbling oil prices, but struggle to maintain high dividends to attract investors. Higher yields are also in part a product of falling stock prices, as the existing dividend becomes a larger percentage of a lower share price.
Kinder Morgan, Inc. operates as an energy infrastructure and energy company in North America. The company operates through Natural Gas Pipelines, CO2, Terminals, Products Pipelines, Kinder Morgan Canada, and Other segments.
