Energy retail booms in otherwise calm energy markets
Energy commodities and large-cap energy stocks performed relatively well on Thursday, while thematic small-cap energy names traded sharply lower. With small cap stocks in other sectors (IWM) trading in line with its larger-cap counterparts (TO SPY), there is no clear explanation for the small cap energy route.
Brent (CO1:COM) and WTI (CL1:COM) were up around 1% around midday Thursday. US natural gas (NG1:COM) fell around 2% on stronger than expected inventory build, although European natural gas closed up almost 5%. Maritime thermal coal prices also rose, with Newcastle coal (XAL1:COM) rising around $5 to $331.
In large-cap energy, Exxon (XOM) took advantage of an upgrade from RBC and traded higher on the day, alongside Cheniere (LNG). European majors Shell (SHEL) and BP (BP) also closed higher in Europe, although both names fell during afternoon trading in the US. EQT (EQT) performed poorly, despite a higher price target from Piper on Thursday, as U.S. natural gas prices weakened.
Interestingly, small-cap energy stocks, largely held by retail investors, tumbled in afternoon trading. Tellurian (TELL) was a favored small cap play on the emerging natural gas export theme. Despite rising gas prices in Europe, shares of Tellurian (TELL) fell more than 7% on Thursday. Coal stocks, largely ignored by institutional investors, traded lower, led by Peabody (BTU) and CONSOL (CEIX); both names fell more than 10% despite rising international coal prices. Uranium-focused names also slumped, with Cameco (CCJ) and the Sprott Uranium Trust (OTCPK:SRUUF) down 8% and 6%, respectively.
After a strong year-to-date performance, traders may be taking profits ahead of Q1 results. However, the fundamentals for the supply of oil, gas, coal, uranium and refined products have never been stronger, suggesting that the first quarter results could reward those who remain in the trades. small cap energy.