U.S. Energy Information Administration reported data Wednesday that showed oil inventories climbed 8.4 million barrels to 434.1 million barrels last week. This is the highest level in EIA weekly data history that goes back to August 1982, according to the Wall Street Journal.
The data release comes amid an ongoing global oversupply of crude oil that has kept oil prices down for months.
Exclusive Report:Jim Cramer’s Best Stocks for 2015
Meanwhile, data shows the U.S. oil drilling rig count has been declining since October. Oilfield services company Baker Hughes (BHI) is due to release the latest U.S. rig data on Friday.
A decline in the U.S. rig number should translate to a decrease in domestic oil production. JBC Energy predicts that the decrease in the number of rigs to this point should result in a drop in crude output of 200,000 to 250,000 barrels a day in the second half of 2015, and a further rig count drop should lead to steeper output declines, the Journal noted.
WTI crude was down 2.96% to $49.48 at 11:15 a.m., while Brent crude was down 0.67% to $61.22, according to CNBC.
Separately, TheStreet Ratings team rates PENN WEST PETROLEUM LTD as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate PENN WEST PETROLEUM LTD (PWE) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PENN WEST PETROLEUM LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, PENN WEST PETROLEUM LTD swung to a loss, reporting -$1.77 versus $0.37 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 144.1% when compared to the same quarter one year ago, falling from $34.00 million to -$15.00 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PENN WEST PETROLEUM LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 70.81%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 142.85% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 20.1%. Since the same quarter one year prior, revenues fell by 14.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: PWE Ratings Report