Updated from 1:32 p.m. ESTThe energy sector was choppy Wednesday after two different government reports sent conflicting messages, and prices ended mixed. One revealed higher-than-normal gasoline demand, while the other said petroleum inventories are on the rise. Front-month futures contracts for light, sweet crude added 33 cents to close at $55.37 a barrel. Natural gas prices were off 18 cents at $7.42 per million British thermal units. Heating oil was unchanged at $1.58 a gallon, and gasoline gained a penny at $1.46 a gallon. Out at 10:30 a.m. EST was news that inventories of crude oil totaled 322 million barrels last Friday, up 0.2% compared with a week earlier, according to new data from the Energy Information Administration. Stocks of gasoline and distillate fuel oils climbed, too, disappointing the consensus, which had been looking for a dip. "We are supposed to have a draw-down of distillate inventories this time of year," says Jeff Kleintop, chief investment strategist at Philadelphia-based PNC Wealth Management. Such products are typically consumed to heat buildings during the typically cooler Northern hemisphere winter. The EIA's morning release sent the energy complex lower, but then at 1 p.m. EST the same organization revealed that gasoline was being used at slightly high rates. That was enough to pull crude back up from an intraday low of $53.66.
Turning to the chart-watchers, at least one sees some bullish signs in the gas segment of the energy complex. "With the slope changing from down to flat, the technical picture for natural gas has improved considerably," writes John Roque, an analyst at Natexis Bleichroeder in New York. In particular, he highlights recent higher highs in the momentum indicator for the Amex Natural Gas Index. "We were surprised at the constructive nature of this chart, especially since the underlying commodities had been acting so poorly," he says. He also says a pop back up to $78 a share for producer Apache ( APA) "seems doable." The stock last saw such a price in the fall of 2005. The Amex Natural Gas index was up 0.5%, while Apache gained 0.2%. Meanwhile, RealMoney.com contributor Helene Meisler cautions that the recent run-up in natural gas, which was trading around $6.23 per million BTUs last Wednesday, is "unlikely to continue at this pace." In the energy complex, UBS raised its rating on Norsk Hydro ( NHY) to buy from neutral, helping rally the shares 2.4%. HSBC Securities bumped up its rating on shares of Royal Dutch Shell ( RDS.A) to neutral from underweight. That and better crude prices lifted the stock 0.2%. Banc of America reiterated buy ratings on Valero Energy ( VLO) and Sunoco ( SUN). Shares of Sunoco were up 0.7%, while Valero added 1.1%. Elsewhere, oil behemoth Conoco Phillips ( COP) reported fourth-quarter earnings of $1.91 a share, down from $2.61 a year ago. Sales fell 19%. Shares of Conoco were higher by 1%.