Crude futures fall ahead of US inventories update, energy stocks decline in London

Oil prices declined today to push down most oil and gas stocks in London.
Oil got hit by a stronger US Dollar, which reached its five month highs against the euro, making oil more expensive for holders of other currencies to curb the demand. Demand for heating fuel keeps falling as the weather gets better in the world’s key energy consumers including Europe, the US and China, which saw abnormally cold temperatures this part winter, while the European markets declined today to further weaken commodities.
News from China put more pressure on crude prices when it was reported that the government encouraged banks to cease lending until the end of the month just a week after upping the reserve requirements for banks by 0.5% to 15% of their deposits following an increase of bank-reserve ratios and interbank rates to curb economic activity and prevent the economy from overheating.
Investors will get more cues tomorrow when the US Department of Energy will release its inventories report, which is expected to show another increase after crude stockpiles rose by 3.7 million barrels in the week to 8 January.
March Brent Crude slid below US$77 to settle at US$76.55/barrel, while US light, sweet crude moved down to US$78.08/barrel.
Most major oil and gas companies were in decline today. Tullow Oil (LSE: TLW) was at the bottom of the pile with a 2.2% drop, while Cairn Energy (LSE: CNE) lost nearly 2% and BG Group (LSE: BG) posted a small loss, as did supermajors BP (LSE: BP) and Shell (LSE: RDSB).
Services companies Amec (LSE: AMEC) and Petrofac (LSE: PFC) were flat.
Midcaps followed the trend with Salamander Energy (LSE: SMDR) leading the retreat with a 4% loss, while Heritage Oil (LSE: HOIL) lost 3% and Melrose Resources (LSE: MRS) and Soco International (LSE: SIA) were down 2%. Dana Petroleum (LSE: DNX) was 1.5% lower. Dragon Oil (LSE: DGO), JKX Oil & Gas (LSE: JKX) and Premier Oil (LSE: PMO) all shed 1%.
Wellstream Holdings (LSE: WSM) was 1% lower, while fellow services company Wood Group (LSE: WG) went against the tide with a 1.6% climb.
Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) and energy investor Xtract Energy PLC (AIM: XTR), which updated the market on the progress made by its Turkish associate company Extrem Energy, were the top performers among the small caps with gains of 6% and 5.5% respectively.
Africa focused energy company Dominion Petroleum (AIM: DPL) and North Sea explorers Xcite Energy (AIM: XEL) moved with the sector with losses of over 3%.  http://www.proactiveinvestors.co.uk/companies/news/12423/crude-futures-fall-ahead-of-us-inventories-update-energy-stocks-decline-in-london-12423.html