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AIM Oil Equities Down but Petroceltic, Victoria Oil & Gas and Gulfsands Buck the Trend to Move Higher

Published: 14:41 22 Sep 2009 BST

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Following an overnight recovery from the recently weaker trading sessions, the crude oil price has begun to ascend back towards the top of its established trading range. On London’s Intercontinental Exchange (ICE), crude oil has gained over 1½%.

Commentators have generally attributed this morning’s rise to the continued weakness of the US Dollar, making the ‘black stuff’ more appealing to investors outside the United States. The Dollar index weakened further overnight, falling almost 1%, reversing recent gains. The dollar’s decline this morning was led by selling against the Euro, with Euro:Dollar reaching a 52 week high.

Standing at $71 dollars a barrel, the front month West Texas Intermediary (WTI) crude oil continues to consolidate ahead of several key developments this week. Analyst forecasts are expected to remain fairly cautious at least until any fallout this week’s G20 summit and US inventory data has been digested.

The summit in Pittsburgh will set the tone for a number of key issues; primarily the fate of the emerging global recovery story and the role the US dollar will play in the global economy. Economists believe that the G20’s ambition to rebalance the global economy will require a weaker US Dollar in the longer term.

As always Tuesday brings the weekly US inventory reports into focus, reports suggest that analyst consensus is for an average decline of 1.4m barrels this week. Generally analysts expected Crude prices to hold the current range providing the EIA’s (Energy Information Administration) meet expectations.

Despite this week’s anticipated draw down, the recent trend in distillate stockpiles is expected to continue. American gasoline and distillate stockpiles are now the highest they have been since 1983, and this week analysts are expecting inventories to rise by a further 1.6m barrels.

London’s major Oil & Gas producers have gained impetus from the buoyant crude price on Tuesday, with British Petroleum (LSE:  BP) advancing almost 2% this morning, and fellow blue chip producer Royal Dutch Shell (LSE: RDSB) rose 1% to trade at £17.69.

Tullow Oil (LSE: TLW) also rose, adding 1.8%. Other FTSE 100 constituents Petrofac (LSE: PFC) and Cairn Energy (LSE: CNE) took about the same path, rising 1.3% and 1.6% respectively.

Mid caps were mixed. Heritage Oil (LSE: HOIL) slid 1.6%, while fellow FTSE 250 constituent Dana Petroleum (LSE: DNX) was the top performer among major oil and gas stocks with a 2.2% climb. Dragon Oil (LSE: DGO) rose marginally.

Most juniors were in selling mode this morning. Eastern European focused junior Aurelian Oil & Gas (AIM: AUL) was the leading faller, plummeting 33% after reporting disappointing results from its Voitinel-1 well in Romania, failing to hit oil, but finding gas shows above the targeted area.

US focused Empyrean Energy (AIM: EME) and Latin American focused Gold Oil (AIM: GOO) shed over 5%, while Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) lost over 4%.

North American based explorer Nighthawk Energy (AIM: HAWK) fell 2% today to trade at 35.75p, meanwhile European focused Regal Petroleum (AIM: RPT) and Northern Petroleum (AIM: NOP) also declined, both dropping 1½%.

Not all oil & gas stocks on the AIM market suffered the same fate, Several explorers had a much better session, notably Irish oil and gas exploration company Petroceltic International (AIM: PCI), who announced a new gas discovery in Algeria. The news prompted the stock to rise over 5% this morning, hitting a new 52 week high reaching 21p shortly after the update.

Diversified explorer Victoria Oil & Gas (AIM: VOG) rose more than 2½%, while Falkland Island focused explorer Rockhopper Exploration (AIM: RKH) added 2%.

Gulfsands Petroleum PLC (AIM:  GPX) announced that it had swung into profits in the first half of the financial year, for the first time in five years. Shares in Gulfsands gained over 1% earlier today.

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