Crude oil futures are trading near six-month lows on Thursday as exploding U.S. production is offsetting continued attempts by OPEC to halt falling prices by cutting its production.
On Thursday, West Texas Intermediate, the U.S. benchmark light, sweet crude, settled down about 4.87% to $45.49 a barrel. Its global counterpart, Brent crude, fell 4.61% on the day to $48.45.
It was the second worst single-day performance for WTI futures so far this year-- the commodity fell roughly 5.4% on March 8. Still, oil's Thursday troubles may not have been all its own as the market was seemingly experiencing a broad commodity selloff with gold, silver, copper and iron ore all lower.
But the commodity's bludgeoning was putting a damper on the stocks of U.S. energy companies that reported earnings Thursday. Witness the shares of Chesapeake Energy (CHK - Get Report) and Occidental Petroleum (OXY - Get Report) , which both beat analysts' earnings estimates Thursday but were down about 8% and 3% in mid-morning trading, respectively.
Chesapeake eked out a first quarter profit with earnings per share of 23 cents versus consensus estimates of 19 cents and crushed revenue expectations of $1.1 billion with sales of nearly $1.5 billion during the frame.
KLR Group analysts attributed the earnings beat to higher natural gas liquids price realizations and said the earnings report should have a minor positive value impact on the stock.
Occidental, meanwhile, topped earnings estimates by a penny, reporting income of 15 cents per share versus the Street's estimates of 14 cents a share. The company missed revenue estimates slightly, however, coming in with $2.98 billion in sales against consensus expectations of $3.01 billion.
Capital One Securities analysts were impressed with Occidental's first quarter Thursday. The company followers said the solid quarter was driven by its Permian resources, which took off with a 5% increase in production quarter-over-quarter to 129,000 barrels of oil equivalent per day. Better-than-expected pretax income in its chemical segment also helped, Capital One wrote. The chemical unit reported pretax income of $170 million about 13% above what it was guiding for the quarter.
If oil begins the next session trading below $47 per barrel, any positive earnings signals from U.S. oil producers such as Marathon Oil (MRO - Get Report) and Parsley Energy (PE - Get Report) , which both report after the bell Thursday, will likely have a muted effect on the companies' shares.
Crude futures were falling Thursday due to the latest U.S. crude production and inventory data, which was released Wednesday and is seemingly deepening skepticism that production cuts from the Organization of the Petroleum Exporting Countries and Russia aren't making a dent in elevated global stockpiles.
Inventories fell 930,000 barrels during the week ended April 28, while analysts on consensus were anticipating a decline of 2.3 million barrels.
Moreover, the U.S. Energy Information Administration reported Wednesday that Lower 48 (excluding Alaska) crude oil production was at 8.78 million barrels per day last week, a week-over-week increase of 25,000 barrels per day. U.S. shale production is now up 4.4% year-over-year and almost 800,000 barrels per day higher than the trough in October 2016.
Seaport Global Securities noted Thursday that the EIA's data was moderately bearish overall, but featured some glints of hope from gasoline exports and total gasoline days supply.
Gasoline exports were 732,000 barrels per day last week, the best level since late February, according to SGS, while days supply of gasoline before stripping out exports was slightly better week-over-week.
Meanwhile, U.S. imports were lower week-over-week, but have grown in the past month. The EIA said crude oil imports averaged about 8.3 million barrels per day last week, down by 648,000 barrels per day from the previous week.
In the past four weeks, crude oil imports averaged over 8.2 million barrels per day, 4.9% above the same four-week period last year.
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