http://www.bidnessetc.com/63945-petrole ... -up-today/
Bidness Etc takes a look at why Petrobras stock was up today
Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) stock was up 7.78% at $3.38 as of 9:09 AM (EST). The surge in the stock came following reports that the Brazilian oil major had presented a proposal to Sete Brasil for leasing 10 rigs for five years with a possible 5-year renewable policy.
Sete Brasil, which was formed by Brazilian banks and Petrobras six years ago, is sailing in hot waters. If Petrobras had failed to present a lease contract proposal, the latter could have filed for bankruptcy. But Petrobras’s proposition has rejuvenated investor confidence, sending its stock up.
As reported by Bloomberg, shareholders of Sete Brasil are likely to discuss the proposal in the coming week. According to the initial plan, Petrobras had decided to lease 28 rigs for 15 years at $424,000 per day. As mentioned above, the new program has brought the number of rigs down to 10 for 5 years. Petrobras has also decided to reduce the daily rig rental prices.
Another reason that could have contributed to the increase in Petrobras’s stock price was some recovery in crude oil prices. The Energy Information Administration (EIA) made some bullish statements today, projecting US shale production to go down in the next two years, while predicting the oil market to rebalance in 2017. In addition to the EIA, oil investors are also hoping for the OPEC to coordinate and incorporate a production freeze.
During real time trading today, the US benchmark for crude oil, West Texas Intermediate (WTI), was up 5.80% at $31.36 per barrel, while the global benchmark for crude oil, Brent Crude was up 4.06% at $34.35 per barrel.
