Energy stocks trade flat – masking volatility under the surface

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  • Energy equity indices (XLE) traded flat Tuesday, masking volatility under the surface.
  • Natural gas (UNG) favorites Antero (AR), Southwestern (SWN) and EQT (EQT) dropped ~10%, after Freeport LNG announced that a fire would lead to an extended outage at the nation’s largest gas export facility.
  • US natural gas (NG1:COM) prices fell ~15%, and European prices rose ~18%, as traders positioned for reduced export volumes from Freeport LNG.
  • OPEC released official production statistics for May, showing falling production on the back of outages in Libya and tepid growth from Saudi and the UAE.
  • The White House announced additional SPR sales, though a report from the American Petroleum Institute showed inventories of oil and oil products continued to fall.
  • Refiners (CRAK) traded well on the day, with PBF (PBF) and CVR (CVI) up ~4%, as bullish revisions from Wall Street and a fire at the Lyondell (LYB) refinery in Texas boosted share prices and refining margins.
  • Democrats proposed a plan to double taxes on the oil and gas industry (XLE), pulling energy shares back to flat in afternoon trading.
  • Continental (CLR) traded up 15%, after controlling shareholder Harold Hamm announced an offer to take the company private.
  • India’s ONGC said that insurance-related issues at Exxon’s (XOM) former Sakhalin project are impacting the asset’s ability to export crude (USO).

William Murphy

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