Equities Lower with Drag from Magnificent Seven; Gasoline Prices Down 16% from September Highs, DoE Refilling Strategic Reserve
US equities closed mostly lower in Tuesday afternoon trading after stocks finished mostly lower with some drag from the Magnificent Seven. In a gloomy session for energy stocks, gasoline provided a bright spot, with prices down more than 16% from highs in mid-September and the US Department of Energy working to replenish the Strategic Petroleum Reserve. The S&P 500 Energy Index fell by (0.77%) versus the S&P 500 which was down (0.21%). The XLE settled down (0.73%), the XOP fell (0.92%) and all but a few oil and gas E&Ps traded lower.
WTI rose +1.0% to $72.32 and Brent was up +1.1% at $77.20, while Natural Gas recovered to finish the day up +0.6%. Notable gainers on Tuesday were Newpark Resources ($NR) which rose by +1.8% after HC Wainwright initiated coverage, giving the company a Buy rating. Newpark is one of the leading providers of 100% recyclable heavy-duty composite matting systems. Crescent Energy ($CRGY) was up +1.4% after being initiated with a strong Buy at Raymond James.
Top performers in the PRISM Oil & Gas Index were Empire Petroleum Corporation ($EP) which rose +4.0%, Alvopetro Energy ($ALVOF) which was up +2.43% and Imperial Petroleum ($IMPP) which rose 2.32% during the day. Independence Contract Drilling ($ICD) fell by (3.31%), Ring Energy, Inc. ($REI) was down (2.53%) and Trio Petroleum Corp ($TPET) lost (2.20%). The PRISM Oil & Gas index value is $155.90 and performance is up by +55.90% since inception.
Trader’s Lens
Energy Select Sector SPDR Fund
$XLE looks to be set more likely for a further move down, rather than up. The RSI(14) has been staying below 50 and the price seems to be finding resistance in the short term at about $86.
It’s been a tough year for oil/gas companies. $HMENF, a Canadian oil company, based out of Vancouver, is the only company in the Prism MarketView Oil & Gas index to be up YTD. It also looks to have a nice support base at about $0.80 since early 2022.
$XOM continues to trade in a pretty steady range this year between about $95 and $115.
Today’s Top Headlines
The US is Filling the Strategic Reserve
The US is taking advantage of low oil prices and refilling the Strategic Petroleum Reserve (SPR) as much as it can, U.S. Deputy Energy Secretary David Turk told Bloomberg News on Monday. The SPR is at its lowest level since the 1980s, but physical constraints at the network of underground caverns along the US Gulf Coast have limited the Energy Department to purchasing just three million barrels a month.
Russia Committed to OPEC+ Supply Reductions
Russia’s Deputy Prime Minister, Alexander Novak, said Russia is committed to the recently announced OPEC+ supply reductions of 2.2 million bpd (200K bpd in Russian fuels) set for 1Q24. Mr. Novak believes the cuts will allow that market to pass safely through a seasonally slow period of demand. Bloomberg tanker data has Russian seaborne crude exports down (500K) bpd w/w to a 15-week low after Black Sea weather shut-in export terminals.
