Crude oil trades sub-$37, but sector closes on mostly positive tone; steel producers gain

By Stephanie N. Rotondo

Seattle, Dec. 10 – Crude oil got walloped Thursday, sending the commodity price to its lowest level in six years.

But among distressed oil and gas names, the results for the day were mostly positive.

Chesapeake Energy Corp.’s 6 5/8% notes due 2020, for instance, closed up a point at 34, extending the name’s gains into a second day. Prior to the upward surge, the bonds had been nose-diving as the market responded to a planned private debt exchange for 10 series of notes.

In the preferred stock space, Vanguard Natural Resources LLC (Nasdaq: VNRBP) finished the day 61 cents higher, or 10.87%, trading at $6.22. Goodrich Petroleum Corp.’s 10% series C cumulative preferreds (NYSE: GDPPC) were also better, rising 3 cents, or 3.85%, to 81 cents.

But Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) lost 18 cents, or 2.82%, ending at $6.20.

Domestic crude oil prices dropped over 1.6% on the day, trading sub-$37 for the first time since 2009.

The decline was due in large part to a report from OPEC, which showed that production in November jumped to its highest monthly level since 2012.

According to the report, total OPEC production for November rose by 230,100 barrels per day to 31.7 million barrels a day.

The increase was mostly attributed to increased output from Iraq.

The oil cartel also slashed its 2016 estimates for non-OPEC production by 250,000 barrels a day to 57.14 million barrels a day. The new forecast is based on the fact that production in the United States has been on the decline since April.

Steel on the rise

Away from oil, steel names were also faring better on the day.

AK Steel Holdings Corp.’s 7 5/8% notes due 2020 were seen up nearly 3 points at 35, according to a market source.

That source also saw United States Steel Corp.’s 7% notes due 2018 improve by almost 2 points, closing at 65¼.

Among higher rated steel producers, ArcelorMittal’s 6¼% notes due 2021 finished up over a point at 81.

Steel bonds have been moving up for the last couple of sessions, due in part to news that steel imports have been dwindling. Less foreign-made steel is entering the country because of the threat of anti-dumping tariffs. Meanwhile, domestic producers have been slashing prices in order to increase demand.

However, AK Steel said Thursday that it was raising prices on its steel products.

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