This week oil is down at $28.95 per barrel from 30.89 last Friday, February 5th, a 6.7 percent change. Oil reached $26.21 Thursday, February 11 which is the lowest oil has been since 2003. CNN reports Janet Yellen, Chair of the US Federal Reserve, acknowledged the global economy challenges, but that the central bank will still move to gradually raise interest rates. Meanwhile, Japan’s central bank is attempting to build growth with negative interest rates and the European Central Bank (ECB) is considering increasing its stimulus program.
Anadarko Petroleum Corporation (NYSE:APC) announced in a press release to its stockholders a 22 cent and 81% reduction to five cents per share on February 9th. The company justifies the change due to $450 million annual cash this change allows the company for financial stability and flexibility in a tight economy.
SolarCity Corp. (NASDAQL:SCTY) also released 4th Quarter earnings Tuesday February 9. This caused a reaction from the market, and the stock fell to $18.48 per share (Weds) from $29.57 per share at its close Friday February 5. Opening price February 12 was $17.30.
Reports that Chesapeake Energy Corporation (NYSE:CHK) hired lawyers to restructure their debt was met with a drop in stock prices this week. They issued a statement Monday February 8th after the 50.6 percent stock drop, stating they currently hold no intentions of pursuing bankruptcy, but rather plan to use the restructure to increase shareholder value. Cheseapeake stock closed Tuesday at $1.95 per share. Stock prices opened today at $1.86, down $1.20 from its close last Friday, Feb. 5.
Whiting Petroleum Corp. (NYSE:WLL) formerly rated at Ba2 was downgraded to Caa1 rating, a five spot move. In a quote, the Street explains the reason for the downgrade reflect cash flow and other leverage metrics for 2016 and 2017. Whiting has a heavy debt paired with ever falling low oil prices. Whiting Petroleum Corp. opened at $5.12 per share this morning and is currently trading at $4.44 (1:40 pm CST) a 9.57% drop.
Oil Industry Outlook
The U.S. Energy Information Administration (EIA) released the Short-Term Energy Outlook Feb. 9, which forecasts WTI and Brent crude oil prices to average at about $38 per barrel in 2016 and $50 per barrel in 2017, but notes high uncertainty given the current values and futures contracts.
Gasoline is forecasted at just under $2 per gallon in 2016 and up to $20.20 per gallon in 2017, still down from $2.43 in 2015. January average price per gallon was $1.95. February is expected to hit a seven-year low of $1.82 per gallon before slowly rising in the spring.
U.S. crude oil production averaged 9.4 million barrels per day in 2015 and is forecast to decrease to 8.7 and 8.5 million barrels per day in 2016 and 2017 respectively.
OPEC members Saudi Arabia and Venezuela met over the weekend to discuss strategy to raise oil prices, but no agreement to discuss output cuts was met, reports the Motley Fool. Until an artificial reduction in crude supply happens chances are oil prices will remain low and production in non-OPEC nations especially will continue to decline. Companies this greatly concerns include SM Energy, Denbury Resources, Oasis Petroleum and Chesapeake Energy due to their lack of cash resources.