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Tuesday's Energy Stocks: Markets advance as oil settles higher

Broader markets and energy industry shares settled higher on Tuesday, Dec. 27, as oil prices rallied in anticipation of OPEC's output cut deal, which will take effect starting Jan. 1, 2017. Joining other oil-producing nations, Venezuela agreed to cut its oil output by 95,000 barrels per day.

The Dow Jones Industrial Average nudged up 0.06% to 19,945.04, the S&P 500 climbed 0.22% to 2,268.88 and the SNL Energy Index increased 0.15% to 283.61. Meanwhile, Brent crude edged up 1.69% to $56.09 per barrel and light sweet crude rose 1.66% to $53.90 per barrel.

Shares of Dynegy Inc. saw an increase of 3.49% in light trading to finish at $8.60, after FERC conditionally approved Atlas Power Finance LLC's acquisition of several thousand megawatts of mostly natural gas-fired generating plants in the U.S. from Engie.

Atlas Power, a joint venture between Dynegy and Energy Capital Partners LLC and a wholly owned subsidiary of Atlas Power LLC, was formed in February specifically to purchase Engie subsidiary GDF SUEZ Energy North America and its public utility subsidiaries for $3.3 billion.

Among other power producers, First Solar Inc. gained 4.20% on thin volume to $33.99, NRG Energy Inc. rose 2.11% in weak trading to $12.60 and Ormat Technologies Inc. ended 1.35% higher to $53.43 on below-average volume. Merchants outpaced other energy companies for the day as the SNL Merchant Generator Index advanced 2.22% to 82.89.

Tesla Motors Inc. edged up 2.90% on brisk volume to close at $219.53, after finalizing a deal with Panasonic Corp. to manufacture solar photovoltaic cells and modules in 2017 out of a factory in Buffalo, N.Y. The companies will also collaborate on developing next-generation PV technology out of SolarCity Corp.'s facility in Fremont, Calif. SolarCity dipped 0.29% to $20.34.

Avista Corp. has filed a request with the Washington Utilities and Transportation Commission to reconsider Avista Utilities' requests to increase its electric and gas rates. In its decision, the Commission ruled that Avista did not demonstrate that the company's current revenue is insufficient for covering costs and providing the opportunity to earn a reasonable return during the 2017 rate period and the CapEx and increased operating costs are both necessary and immediate.

"The order could be a game changer for Avista. It certainly creates uncertainty as to the regulatory climate in Washington at best. At its worst, it could signal the WUTC's desire for the company to slow its capital spending and growth, in our view," Williams Capital Group wrote in a Dec. 27 research report. The brokerage also reiterated its "hold" rating on Avista shares with a $38 price target.

Avista shares picked up 0.71% on thin volume to $39.99.

ALLETE Inc. earned 0.45% in weak trading to settle at $64.12, after Williams Capital Group lowered its 2017 recurring EPS estimate to $3.50 from $3.62 and its 2018 recurring EPS estimate to $3.76 from $3.86. The move was prompted by ALLETE's 2017 earnings guidance falling in the range of $3.10 per share to $3.50 per share on net income of $155 million to $175 million.

"In our view, the vast majority of ALLETE's earnings and cash flow growth will come from Minnesota Power rate base growth and new industrial/wholesale customer supply agreements absent significant ALLETE Clean Energy or U.S. Water investments," the research company reported.

In the coal sector, Rhino Resource Partners LP jumped 17.50% to $4.70, CNX Coal Resources LP ascended 8.68% to $19.40 and Alliance Holdings GP LP rose 5.48% to $30.22, all in light trading. The SNL Coal Index closed 1.37% higher to 81.10.

January 2017 natural gas futures probed higher in the post-Christmas holiday session Tuesday, Dec. 27, with options expired at the close of business and the contract set to roll off the board at Wednesday's settle. Cold weather in forecasts was behind the day's gains as the market considered strong demand and a more rapid erosion of natural gas inventories.

Market prices and index values are current as of the time of publication and are subject to change.