February 1, 2023

Energy stocks sink as crude oil prices close at three-week lows

Data analyzing in commodities energy market: the charts and quotes on display. US WTI crude oil price analysis. Stunning price drop for the last 20 years. — SlavkoSereda/iStock via Getty Images

Oil and gas (NYSEARCA:XLE) lagged all 11 S&P sectors Wednesday, closing -2% after shedding more than 3% earlier, pressured by another drop in crude oil prices after the Energy Information Administration reported an increase in U.S. crude supplies for the sixth week in a row.

The latest weekly inventory report from the EIA showed a 4.14M-barrel build compared to expectations for a much smaller increase.

Front-month Nymex crude (CL1:COM) for March delivery settled -3.1% at $76.41/bbl, falling below its 50-day moving average ($77.70), and April Brent crude (CO1:COM) closed -3% at $82.84/bbl, both hitting three-week lows.

ETFs; (NYSEARCA:USO), (NYSEARCA:BNO), (UCO), (SCO), (DBO), (DRIP), (GUSH), (USOI), (NRGU)

Among the sector’s biggest losers on the day were Marathon Petroleum (MPC) -4.3%, Hess (HES) -3.9%, EOG Resources (EOG) -3.7%, ConocoPhillips (COP) -3.4% and EQT Corp. (EQT) -3.2%, but several stocks including Exxon Mobil (XOM) trimmed losses from sharp early declines.

EIA data showed “surprising builds across the board,” underlying recent weakness in the energy complex, but further could offer investors an “opportunity to add to long positions,” according to Tyche Capital’s Tariq Zahir, according to MarketWatch.

Crude prices continued lower after the Federal Reserve announced a 0.25% increase in its key policy rate, as expected.

Also as expected, the technical committee of OPEC+ recommended no changes to current production policy.

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