Morning Commentary: Another oil demand forecast cut turns oil, gas preferreds downward again

By Stephanie N. Rotondo

Phoenix, Dec. 12 – Preferred stocks were edging lower in early trading after experiencing a rebound in the previous session.

The previous day’s gains were due to a round of positive economic data, including a decline in jobless claims and a rise in retail sales. There was also some good news out Friday – that consumer confidence was rising, for instance – but that didn’t seem to have as much impact as the previous day’s data points.

Instead, news that the International Energy Agency cut oil demand forecasts for 2015 – the fourth time in five months – was putting pressure on the market.

Oil prices continued to weaken on the heels of that news. As such, oil and gas preferreds were trending lower yet again.

Goodrich Petroleum Corp.’s bellwether 9.75% series D cumulative preferreds (NYSE: GDPPD), for example, were off 18 cents, or 2.18%, at mid-morning, trading around $8.07. However, that was better than the $8.00 opening level.

While most of the market was feeling the burn, TravelCenters of America LLC’s $120 million of 8% $25-par senior notes due 2029 continued to improve.

A trader pegged the notes at $24.85 bid.

The deal came Tuesday via Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, RBC Capital Markets LLC and UBS Securities LLC and freed to trade on Wednesday.

Overall, the Wells Fargo Hybrid and Preferred Securities index was trading off 2 basis points early in the session.

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