Energy gains earlier in the session disappeared in Thursday afternoon trading following negative speculation on theU.S.payroll report expected for release tomorrow. The highly anticipated data is expected to confirm the plodding speed of the recovery. The unemployment rate is anticipated to come in around 8.2 percent for 2012, a scarce improvement on current levels. This in turn, damaged oil and gas stocks that had rallied somewhat earlier in the week on the basis of optimistic manufacturing data.
Oil and gas stocks were only one area affected by a broad market sell off expected to continue into tomorrow after the release of the payrolls data.
Most of the major energy stocks fell evenly across the board, sliding slightly less than one percent. Exxon Mobile (XOM), Chevron (CVX) and ConocoPhillips (COP) all sunk on the news while Hess (HES) was surprisingly resilient making moderate gains for the day.
Chesapeake Energy Corp. (CHK) bucked the trend for the day closing up by a couple percentage points and establishing itself among only a handful of gainers for the day.Chesapeake’s gains had less to do with the broader market than it did with the company’s decision to sell-off off share properties in order to streamline its business and focus on land-based gas production. The company will specialize in domestic shale-gas fields.
Natural gas, being among the cheapest available forms of energy and having a less deleterious impact on the environment than other energy counterparts has been rising in popularity. It is accounting for an increasing percentage of profits for companies like Exxon (XOM) and others. IfChesapeakecontinues to concentrate more of their business not it, it could help them bring in larger profits in the future.
Natural gas helped to reverse some of the losses today as a storm brewing in the Atlantic near Mexico threatened to disrupt production on the pipelines. The storm is likely to turn into a tropical cyclone within the next several days.
Meanwhile, upgrades from Wells Fargo on several natural gas companies helped to further gains within the subsector. Among Wells Fargo’s picks was natural gas processor, Atlas Pipeline Partners (APL), which it upgraded to outperform from market perform. It also upgraded crude and natural gas transportation and storage company Enbridge Energy Partners (EEP)from market perform to out perform. Shares of the company got only a mild boost from the news.
BP PLC (BP) lost on the gains of natural gas today. The company has started to evacuate personnel on some of the rigs expected to be caught in the storm, indicating there could be a halt in production. The company slid more than any comparable energy corporation in trading today.