Crude loses support at $80, falls as Total meets with unions to end strike

Crude oil futures slipped below US$80/barrel today after rallying on concerns over the ongoing strikes at six of Total’s (NYSE: TOT) French refineries and Iran’s nuclear program early in the week.
More positive news came yesterday, when China reported that it has processed 29% more crude in the month of January than a year before, signalling an increase in demand from the world’s second largest energy consumer.
However, oil found itself under pressure on Tuesday after an update from Germany showed a decline in the Ifo index from 95.8 to 95.2 in January instead of an expected increase to 96.4, reflecting a lower level of business confidence in the country to push down European stock markets.
Crude declined further when Total met with a workers’ union, expecting to settle the dispute and end the strikes.
April Brent Crude declined to US$77.36/barrel, while US light, sweet crude moved down to US$79.24/barrel.
The American Petroleum Institute (API) is set to release its inventories report today with Reuters projecting an increase of 1.9 million barrels, signalling lower crude demand in the US.
Blue chip oil and gas producers were in decline today. Cairn Energy (LSE: CNE) and Tullow Oil (LSE: TLW) led the retreat with losses of nearly 2%. BG Group (LSE: BG) declined marginally, BP (LSE: BP) lost nearly 1%, while fellow supermajor Shell (LSE: RDSB) was flat.
Petrofac (SLE: PFC) also lost almost 1%, while fellow oil and gas engineering firm Amec (LSE: AMEC) was unmoved.
Midcaps were mixed. Melrose Resources (LSE: MRS) was at the bottom of the pile with a 3.5% loss. Heritage Oil (LSE: HOIL) was down 1.3%, while Premier Oil (LSE: PMO) shed nearly 1% and Soco International (LSE: SIA) declined marginally.
Dragon Oil (LSE: DGO) outperformed the sector with a 1% gain after announcing its full year results and reporting a cash balance of over US$1 billion. Dana Petroleum (LSE: DNX), Salamander Energy (LSE: SMDR) and JKX Oil & Gas (LSE: JKX) also were in the black, adding less than 1%.
Services companies Wood Group (LSE: WG) and Wellstream Holdings (LSE: WSM) made little headway.
North American based explorer Nighthawk Energy (AIM: HAWK) slipped 15% after updating the market on its progress at the Jolly Ranch project in Colorado.
EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) lost 3%, while Mongolia-focused Petro Matad Ltd (AIM: MATD) added 3.5%.

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