Energy markets mixed on higher U.S. crude oil inventories

Energy markets mixed on higher U.S. crude oil inventories

April 25 (UPI) — Oil prices were mixed Wednesday on signs of declining U.S. petroleum inventories and the possibility the United States will extend the Iran nuclear deal.

Brent oil futures were down 25 cents to 73.64 at 10 a.m. EDT.

The June crude oil futures were up 3 cents to 67.73 at 10 a.m. EDT.

On Tuesday night, the American Petroleum Institute reported a buildup of 1.1 million barrels of U.S. crude oil inventories last week, showing an unexpected weekly climb. Last week, the API reported a draw of 1.047 million barrels of crude oil.

Analysts had expected a drop in crude oil inventories.

The API data also includes a decline of 2.7 million barrels in gasoline stockpiles, while inventories of distillates fell by 1.9 million barrels.

On Tuesday, stock prices were lower as President Donald Trump signaled that the United States and France are working on an agreement to preserve the Iran nuclear deal.

The Dow Jones Industrial Average lost 424 points, or 1.74 percent, while the S&P 500 lost 1.34 percent and the Nasdaq dropped 1.68 percent.

On Wednesday, the indexes continued a lower trend. Within 30 minutes of opening, the Dow was down 186.52, the S&P declined 18.80 and NASDAQ was 51.11 lower.

Trump has until May 12 to decide whether to pull out of the deal.

“President Trump said the Iran nuclear deal was insane and ridiculous, yet that does not mean necessarily that he is going to back out of it,” Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter. “Yet the possibility that the U.S. will not pull out of the deal reduced the risk premium for oil causing a sell off along with a sudden spooked US stock market.”

Also Tuesday, the 10-year U.S. Treasury yield broke through to a 3 percent yield.

“What was also insane and ridiculous was the stock markets reaction to a 3 percent yield,” Flynn wrote. “The market that has been praying for an economy that was strong enough to raise rates now fears that somehow that a 3 percent yield is not a good thing — which really is insane and ridiculous.”

Flynn said, though, that the growing global economy is driving global oil demand.

Caterpillar, the biggest maker of construction and mining equipment, increased its 2018 profit projection by as much as 24 percent. Chief Financial Officer Brad Halverson said, however, that first-quarter adjusted profit per share “will be the high watermark for the year.”

Caterpillar’s per-share earnings for 2018 range from $10.25 to $11.25 per share.

And Hess reported a net loss of $106 million in the first quarter of 2018, compared with a net loss of $324 million in 2017’s first quarter. On an adjusted basis, the after-tax net loss was $72 million.

The company said the improved after-tax adjusted results reflect higher realized crude oil selling,
prices, lower operating costs and depreciation, depletion and amortization expense, which was partially offset by lower production volumes, primarily because of sold-off assets.

“Our focus for 2018 is on execution and we believe we are off to a very strong start to the year,” Chief Executive Officer John Hess said. “In the first quarter, we increased cash returns to shareholders, reduced debt, exceeded our production guidance, continued to lower our costs and announced two significant oil discoveries offshore Guyana — Ranger and Pacora.”

The U.S. Energy Information Administration is expected to publish weekly data later this morning. Analysts polled by S&P Global Platts predicted a decline of 1.1 million barrels in crude stockpiles and 500,000 in gasoline supplies for last week.