It was a week where both oil and natural gas futures settled higher.

With earnings remaining front and center, the major headlines came from Chevron Corp. CVX and BP plc’s BP fourth quarter underperformance. The dramatic fall in oil prices impacted the energy majors’ Dec quarter numbers, which missed analysts’ expectations.

Overall, it was a pretty good week for the sector. West Texas Intermediate (WTI) crude futures rallied 4.4% to close at $33.62 per barrel, while natural gas prices soared 7.3% to $2.298 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Crude at Sub-$30, Suncor to Buy Rival in Sweetened Deal.)

Oil prices moved north in reaction to speculation that OPEC and non-OPEC producers might discuss output cuts at a meeting this month to bolster prices.

Natural gas also fared better after an inventory report showed a larger-than-expected withdrawal. The heating fuel was also buoyed by predictions of strong demand due to colder winter weather forecasts over the next few days.

Recap of the Week’s Most Important Stories

1.    U.S. energy giant Chevron Corp. reported dismal fourth quarter results as the oil market slump continues to deepen. The company reported loss per share of 31 cents, contrary to the Zacks Consensus Estimate for a profit of 48 cents. Last year, Chevron earned $1.85 per share during the period.

Chevron’s total production of crude oil and natural gas edged up 3.5% from the year-earlier level to 2,673 thousand oil-equivalent barrels per day (MBOE/d). The U.S. output increased 6.8% year over year, supported by a 2.4% improvement in the company’s international operations (accounting for 73% of the total).

However, gains on the production front were more than offset by the sharp downfall in oil prices, the net effect resulting in a huge loss for the upstream division. (See More: Chevron Reports Q4 Loss as Oil Price Slump Continues.)

2.    British oil and gas company BP plc came out with weak fourth quarter numbers due to sharp decline in oil prices. Earnings per ADS – on a replacement cost basis, excluding non-operating items – came in at 6 cents, lower than the Zacks Consensus Estimate of 17 cents and also saw a drastic decline from the year-ago earnings of 74 cents.

The company sold liquids for $37.05 per barrel in the quarter (against $69.03 in the year-earlier quarter) and natural gas for $3.47 per thousand cubic feet (against $5.54). Overall price realization fell to $29.54 per Boe from the year-ago level of $51.53 per Boe. However, total production of 2.369 million barrels of oil equivalent per day was up 8.3% year over year.

Grappling with the deepening crude slump, BP is set to cut some 7,000 staff and contractor jobs over the next two years.

3.    Oil Refiner Valero Energy Corp. VLO came out with better-than-expected fourth quarter earnings on the back of higher refining throughput volumes, which increased to 2.85 million barrels per day, higher than the year-earlier level by 34,000 barrels per day. This was partly offset by the decline in company-wide throughput margins -  to $10.87 per barrel from the year-ago level of $11.17 per barrel.

While total operating cost per barrel fell 1.5% year over year to $5.23 during the quarter, refining operating expense per barrel was $3.47 compared with $3.76 in the year-ago quarter. (See More: Valero Beats Q4 Earnings and Revenue Estimates.)

4.    Oilfield Oil drilling equipment maker Cameron International Corp. CAM reported better-than-expected fourth-quarter 2015 earnings, propelled by a sharp increase in operational income from its Subsea segment that reflected robust execution. North American pricing pressure partially offset the results.

During the quarter, Cameron received orders totaling $1,536 million, down 23.4% year over year. As of Dec 31, 2015, Cameron's total backlog was $6,617 million, down 30.6% from the year-earlier level of $9,536 million, as all four segments saw their tally decline. (See More: Cameron International Q4 Earnings Beat on Sound Execution.)

5.    Europe’s largest oil company Royal Dutch Shell plc RDS.A received the authorization from its shareholders to proceed with the acquisition of BG Group plc − a leading upstream energy player in the UK. The permission clears the final most important obstacle that was in the path of Shell’s BG buyout.

It is to be noted that the more than 83% shareholders of the integrated player voted in favor of the merger– touted one of the biggest in the energy space in a decade. The transaction – originally valued at $70 billion but now worth $50 billion amid the slide in oil prices – will likely close by Feb 15, but is subject to approval from BG Group shareholders. (See More: Shell Gets Green Signal from Shareholders for BG Merger.)

Price Performance

The following table shows the price movement of the major oil and gas players over the past week and during the last 6 months.

Over the course of last week, ‘The Energy Select Sector SPDR’ posted a gain of 7.71% as investors witnessed a bout of buying in major companies. The best performer was Houston-based energy major ConocoPhillips COP that added 12.2% to its stock price.

But longer-term, over the last 6 months, ‘The Energy Select Sector SPDR’ lost 17.51% of its value. Interestingly, ConocoPhillips was the main laggard, as it witnessed a 22.4% price decline. However, refiner Valero Energy was able to buck the trend and was the chief beneficiary on the bourses with its shares advancing 6.3% during this period.

What’s Next in the Energy World?

Apart from the usual releases in this week – the U.S. government data on oil and natural gas – market participants will be closely tracking a series of top-tier economic readings, including those on manufacturing, services, construction spending and factory orders. In corporate news, the 2015 Q4 earnings remain the primary focus this week, with some S&P 500 members coming out with quarterly results.

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