Shares of energy companies fell sharply on Thursday, again sitting at the bottom of the S&P 500 leaderboard, as signs of slowing consumption sent oil prices sliding to six-week lows.
The Energy Select Sector SPDR ETF (NYSEARCA:XLE) closed -3.7%, slumping 25% from its peak in early June and nearly 19% this week alone, although the group is still up 26%.
U.S. crude oil futures (CL1:COM) closed -1.8% to $104.27/bbl, the lowest since May 10, after the American Petroleum Institute estimated U.S. crude inventories surprisingly increased by 5.6M barrels for the week ending June 17, underscoring concerns about demand destruction.
“Future demand destruction from a possible looming recession is countering near-term real demand that remains very strong,” BOK Financial senior VP of trading Dennis Kissler told Bloomberg.
The Energy Information Administration delayed the release of its weekly report on oil inventories due to problems with its systems; analysts were forecasting a 1.2M-barrel drop in crude inventories and an 800K-barrel decline in gasoline stockpiles.
U.S. natural gas futures (NG1:COM) settled -9% to $6.239/MMBtu, the lowest closing price since April 6, as stockpiles showed a bigger than expected build of 74B cf during the week ended June 17.
Among oil and gas names posting the largest losses: (NYSE:VLO) -7.6%, (SLB) -6.7%, (PSX) -6.6%, (HAL) -6.4%, (COP) -5.5%, (FANG) -5.4%, (MPC) -4.9%, (DVN) -4.8%.
Germany’s government moved closer to rationing natural gas after Russia cut deliveries in an escalation of the economic war triggered by the invasion of Ukraine.
Biden administration officials reportedly struck a more conciliatory tone with oil company executives in a meeting to discuss potential responses to soaring gasoline prices.
