Oil Bounces Back After Two Days Of Roiling

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After two days of sharp sell-offs, crude oil regained its traction on Wednesday trade. Although this may be considered as good news somehow, investors still remain uncertain if the equilibrium of the supply and demand of global crude can still be restored.

International benchmark West Texas Intermediate futures for February delivery changed hands at $51.17 per barrel which is 35 cents—or 7 percent— in the Globex electronic session on the New York Mercantile Exchange. While Brent crude for March delivery was up 0.8 percent or 39 cents to $54.04 per barrel.

A 6 percent fall in the previous two US trading sessions leading to bargain-hunting was the main driver of the recent buying as analysts see it. With speculations that some OPEC producers that agreed with the deal were still producing way beyond agreed quotas, the contradiction seemed inevitable. Also, others such as Iran were in an aggressive sell-off of inventories.

In a report by the Wall Street Journal Tuesday, Libyan armed forces have penned deals that permit the National Oil Co. (NOC) to revive key infrastructures for petroleum production. This consequently led to a three-year high increase of 708,000 barrels a day in Libya’s production for this week after a fall of below 200,000 barrels a day, a representative of NOC said.

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NOC thinks that it can raise its production higher from its average daily production of 575,000 barrels a day in November during the announcement of the OPEC deal to 900,000 barrels a day this year.

Even if the production cut pledge took effect earlier this month, the market would still have to wait until mid-February when the Organization of the Petroleum Exporting Countries will release its January production data to notice the premature effects of the output curb.

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Chesapeake Energy Corporation Fails to Meet Earnings Forecasts

Chesapeake Energy Corporation (NYSE: CHK), the second largest producer of natural gas posted downbeat earnings results today as oil and natural gas markets struggle to report continuous improvement.

For the second quarter of the current fiscal year, the natural gas producer reported an adjusted loss of 14 cents per share, failing to meet the consensus estimate by 3 cents. Before the adjustments, the natural gas corporation lost approximately $1.8 billion or $2.48 per share during the given period. This loss is primarily due to a $1.045 billion impairment charge against Chesapeake’s oil and natural gas assets.

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In the given period, the company managed to generate revenues of $1.6 billion, missing forecasts of $330 million. The natural gas producer’s revenues have been cut in half on a year-over-year basis.The reason behind this is that the average realized prices on crude oil and natural gas slumped during the quarter.

Due to the ongoing decline in the energy markets, Chesapeake has shed over 90 percent of its market value. Aside from the low oil price environment, the company’s biggest concern at the moment is its high debt load. So far this 2016, the natural gas company employed a number of measures, such as a major debt reduction through swaps.

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Chesapeake CEO Doug Lawler stated, “In 2016, we have made substantial progress on many fronts, including the reduction of more than $1 billion of debt, the reduction of complexity in our portfolio through the purchase of oil and natural gas interests previously conveyed in certain volumetric production payment transactions (VPPs), the continued improvement in our cash cost structure and the optimization of our current portfolio through non-core asset sales.”

After the earnings report, the company’s stock is changing hands at $5.15 during pre-market hours, down by 2.65 percent. As of 10:32 AM GMT -4, the CHK stock is trading at $5.08, down by 3.88 percent or 0.20 points.

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