ConocoPhillips (COP)  

​Oil prices swing amid conflicting supply reports


Headshot 2
Paul Conley | FlashRatings | Monday, September 12, 2016 6:42 PM EDT
Oil prices continued their recent swings Monday, rising slightly as traders shrugged off a series of bearish news items regarding production, and focused instead on a report of substantial drawdowns in the stockpile in Cushing, Okla.

Inventory in the Cushing tanks plummeted by more than 1.2 million barrels in the week ended Friday, Sept. 9, according to the Wall Street Journal, citing sources who had seen data provided by Genscape Inc. West Texas Intermediate for October delivery settled at $46.06 a barrel on the New York Mercantile Exchange, a rise of 18 cents.

Earlier in the day, prices had fallen as the Organization of Petroleum Exporting Countries said it expected production outside of OPEC to grow by 200,000 barrels per day next year – a dramatic shift from the group’s earlier prediction of a decline of 150,000 barrels per day.

OPEC’s bearish news followed Friday’s bullish announcement from the U.S. government that oil stocks had fallen by 14.5 million barrels. 

Analysts’ sentiments across the sector are as mixed as prices and the news. On Sept. 7 Analysts at Jefferies upgraded ConocoPhillips (COP) from "underperform" to "hold", and raised the target price from $37 to $40. With that, some 40 percent of analysts rate the company positively. 

Also on Sept. 9, FBR Capital Markets raised its target price from $17 to $19 and maintained its “outperform” rating on Callon Petroleum (CPE), an independent drilling company with operations in the Permian Basin.

A day earlier, analysts at Canaccord Genuity maintained their "buy" rating for Callon and raised the target price from $15 to $18. Canaccord Genuity notes, “CPE is acquiring 5.7K net acres in northwest Howard, thus far the most prolific area of the county and near the company's first Howard Wolfcamp A well, which posted highly impressive initial results.” Callon has positive ratings from 88 percent of the analysts that track it.

And finally, SunTrust today began coverage of Chesapeake Energy Corp. (CHK) with a “buy” rating and a price target of $11. That comes just days after Wunderlich upgraded Chesapeake Energy from “hold” to “buy” with a price target of $10.