SECTOR COMMENTARY

Energy stocks rebounded from yesterday’s steep slide as the broader markets advanced on news of upbeat retail sales data. Energy ended the day as one of the best-performing sectors in the market with some assistance from commodity prices following the underperformance of the prior session. Within the complex, E&Ps were the best performers while integrateds experienced more modest gains. Refiners were mixed as WTI’s rise narrowed its discount to Brent by $2 from a peak of more than $15 on Monday.

Cimarex Energy paced the E&Ps, rallying more than 7% on its 2014 guidance and operations update, which showed that it would ramp up spending by over $200 million to produce double-digit production growth. Shares of Anadarko Petroleum also rallied as the company addressed Kerr-McGee’s offset claim in the Tronox case.

WTI gained $0.79 or 0.86% to $92.59 as traders squared positions amid some signs of strength in the U.S. economy following upbeat retail sales data. Traders bought contracts to square futures and options positions ahead of the U.S. February oil contract's expiration on January 21 as there will be no floor trading on that day due to the Martin Luther King Jr. holiday. Meanwhile, Brent stayed in the red as incremental increases in Libyan oil supply and expectations that Iranian crude will return to market weighed on prices.

Natural gas future rallied $0.095 or 2.22% to $4.369, extending Monday’s greater than 5% rally, amid speculation that Thursday’s EIA data will show a record storage withdrawal and that temperatures will get cooler next week. MDA Weather Services revised its forecast to predict colder weather than previously expected over the 11- to 15-day range in the eastern two-thirds of the country.

U.S. INTEGRATEDS

Reuters - Exxon Mobil Corp said its 503,000-barrel-per-day Baton Rouge, Louisiana, refinery experienced brief flaring on Tuesday as the result of a safety valve release.

INTERNATIONAL INTEGRATEDS

Reuters - Italy's Eni will follow other foreign energy companies and pull out of Polish shale gas exploration due to unclear regulation and difficult geology, local daily Puls Biznesu reported on Tuesday.

(Late Monday) Reuters - Maersk Oil, a unit of oil and shipping group A.P. Moller-Maersk, has received Kurdistan Regional Government (KRG) approval to buy 40 percent stakes in two exploration blocks from Repsol.

Reuters - Petrobras on Tuesday "emphatically denied" that it is in talks with India's ONGC Videsh to sell part of its stake in the giant Libra offshore prospect in Brazil.

Reuters - Royal Dutch Shell could look to sell $15 billion worth of assets over the next two years including some North Sea fields, said a media report on Tuesday, expanding on its existing guidance that divestments would accelerate this year.

Reuters - Statoil awarded two contracts worth 516 million British pounds to Siemens for work on the Dudgeon Offshore Wind Farm in the UK sector of the North Sea, Statoil said on Tuesday.

Reuters - Statoil has halted production at the Gullfaks B platform in the North Sea after discovering a hole in a pipe to the flare system, it told state broadcaster NRK on Tuesday.

Reuters - Total has received the green light from Chinese autorities to invest in a $4 billion project to transform coal into petrochemical products in a facility in the northern province of Inner Mongolia, Total said on Tuesday.

U.S. E&PS

(Late Monday) Reuters - Anadarko Petroleum Corp said it should pay as little as $850 million in damages over the 2005 spinoff of paint materials company Tronox Inc, 94 percent below the maximum amount a federal bankruptcy judge said it might owe.

(Late Monday) Press Release - Cimarex Energy Co. released its 2014 capital plan of $1.8 billion, 78 percent of which is earmarked for projects in the Delaware Basin. Total company production is expected to grow to an average 760-800 MMcfe per day in 2014, a midpoint increase of 13 percent over 2013. Estimated growth in oil production of 17-19 percent will outpace natural gas liquids (NGL) and natural gas production growth. The capital program will be funded with cash flow from operating activities and bank debt.

KLR raised its rating on Cimarex Energy Co. to ‘Accumulate from ‘Hold’.

Imperial Capital initiated coverage of Comstock Resources with an ‘Outperform’ rating.

(Late Monday) Press Release - Laredo Petroleum, Inc. announced the pricing of $450 million in aggregate principal amount of 5.625% senior notes due 2022. Interest is payable on January 15 and July 15 of each year. The first interest payment will be made on July 15, 2014, and will consist of interest from closing to that date. The offering is expected to close onJanuary 23, 2014, subject to customary closing conditions. The Company will use the net proceeds of the offering, if completed, for general working capital purposes. The senior notes will be senior unsecured obligations of the Company and will be guaranteed on a senior unsecured basis by the Company's existing subsidiary and all of its future subsidiaries, with certain exceptions.

Press Release - W&T Offshore, Inc. today provides updates on the progress with U.S. Government regulators concerning certain aspects of its operations on federal oil and gas leases in the Gulf of Mexico. As previously disclosed, on November 19, 2013, W&T received a Notice of Suspension and Proposed Debarment and a Notice of Clean Water Act Listing from the United States Environmental Protection Agency's Suspension and Debarment Official (the "EPA SDO"). The suspension and proposed debarment is directed toward the parent company, W&T Offshore, Inc., and suspends it from participation in future federal contracts, including future federal oil and gas leases, but does not affect or limit its operations on federal oil and gas leases it presently holds. In addition, the suspension and debarment does not affect or limit W&T Energy VI, LLC, an operating subsidiary of W&T and a significant leaseholder in the Gulf of Mexico.

CANADIAN E&PS

CIBC cuts its rating on Legacy Oil + Gas Inc to ‘Sector Performer’ from ‘Sector Outperformer’.

OIL SERVICES

Morgan Stanley lowered its rating on Baker Hughes, Cameron International and Weatherford to ‘Equal Weight’ from ‘Overweight’.

Press Release - Basic Energy Services, Inc. today reported selected operating data for the month of December 2013. Basic's well servicing rig count remained unchanged at 425. Well servicing rig hours for the month were 62,400 producing a rig utilization rate of 61%, compared to 62% and 61% in November 2013 and December 2012, respectively.

REFINERS

(Late Monday) Reuters - HollyFrontier Corp on January 7, co's unit entered into second amended, restated pipeline delivery, tankage and loading rack throughput agreement. Amended and restated throughput agreement provides for construction of new storage tank assets at refinery in El Dorado. Agreement amends the base tariff applicable to tankage throughput.

Reuters - Phillips 66 said on Tuesday that a planned maintenance at its 139,000-barrel-per-day (bpd) Los Angeles-area refinery in Wilmington was under way.

Reuters - Valero Energy Corp has cut a planned expansion of its 205,000 barrel per day (bpd) St. Charles, Louisiana, refinery by 15,000 bpd, according to a public notice filed with the Louisiana Department of Environmental Quality on Tuesday.

MLPS

Barclays lowered its rating on Energy Transfer Partners LP, Genesis Energy LP, Hi Crush Partners LP and Southcross Energy Partners LP to Equal Weight’ from ‘ Overweight’

Barclays raised its rating on Magellan Midstream and MPLX LP to ‘Overweight’ from ‘Equal Weight’.