Oil Industry Stocks Slip With Oil Prices
NEW YORK — Energy industry stocks retreated Monday, following oil prices lower, as investors worried about weakening demand and some cashed in profits from the bull run of recent weeks.
Rising inventories of crude oil and gasoline, coupled with a slight decline in demand, pressured oil prices downward. A barrel of oil, which topped $75 in late April, traded below $69 on Monday, while natural gas and gasoline prices also declined.
Weakness in the commodities market sent equities of oil producers and refiners lower, along with shares of the drilling and services contractors that serve the industry.
"Demand growth is decidedly below where it was a year ago," said Roger Read, an energy analyst with Natexis Bleichroeder. "That's what got the group a little bit spooked."
Two of the country's top oil producers, Exxon Mobil Corp. and Chevron Corp., saw their shares slip. Among the majors, Amerada Hess Corp. showed the largest percentage decline, with shares falling $2.65, or 1.8 percent, to $143.09 in afternoon trading on the New York Stock Exchange.
"When oil pulls back, people use that as an opportunity to take profits," said Mark Urness, an analyst with Calyon Securities. He noted that despite the declines, the group of oil services stocks he follows is up about 26 percent since the beginning of the year.
"Certainly, nothing fundamentally has changed at all," he said. "The earnings this quarter demonstrated the tremendous operating leverage these companies have and the pricing power they've been able to exert."
It would take a drop in oil prices to the mid-50s before demand for services would wane, he said.
Shares of large services companies including BJ Services Co. traded lower. National Oilwell Varco Inc. led the percentage decline in the group, with its stock shedding $1.95, or 2.7 percent, to $69.47 on the NYSE.
Oil refiners took a hit, as well. Refiners' crack spreads _ or the difference between the price refiners pay for crude oil and the selling price of refined products _ have contracted sharply, from a peak of $22.17 on April 25 to about $14 today, said Read.
Valero Energy Corp., the nation's largest independent refiner, saw its shares dip 47 cents to $64.53 on the Big Board, while refiner Tesoro Corp. shares fell 65 cents to $70.36.
Shares were down broadly among independent oil and natural gas producers. Large independent Devon Energy Corp. traded 30 cents lower at $62.96. EOG Resources Inc. shares fell $2.37, or 3.1 percent, to $73.94 on the NYSE, while XTO Energy Inc. shares lost 70 cents to $42.85.
A barrel of crude oil was quoted down $1.19 to $68.75 in late-day trading on the New York Mercantile Exchange. Gasoline futures fell about 2 cents to $1.98 a gallon. Natural gas lost 27 cents to sell at $6.64 per thousand cubic feet.
Rising inventories of crude oil and gasoline, coupled with a slight decline in demand, pressured oil prices downward. A barrel of oil, which topped $75 in late April, traded below $69 on Monday, while natural gas and gasoline prices also declined.
Weakness in the commodities market sent equities of oil producers and refiners lower, along with shares of the drilling and services contractors that serve the industry.
"Demand growth is decidedly below where it was a year ago," said Roger Read, an energy analyst with Natexis Bleichroeder. "That's what got the group a little bit spooked."
Two of the country's top oil producers, Exxon Mobil Corp. and Chevron Corp., saw their shares slip. Among the majors, Amerada Hess Corp. showed the largest percentage decline, with shares falling $2.65, or 1.8 percent, to $143.09 in afternoon trading on the New York Stock Exchange.
"When oil pulls back, people use that as an opportunity to take profits," said Mark Urness, an analyst with Calyon Securities. He noted that despite the declines, the group of oil services stocks he follows is up about 26 percent since the beginning of the year.
"Certainly, nothing fundamentally has changed at all," he said. "The earnings this quarter demonstrated the tremendous operating leverage these companies have and the pricing power they've been able to exert."
It would take a drop in oil prices to the mid-50s before demand for services would wane, he said.
Shares of large services companies including BJ Services Co. traded lower. National Oilwell Varco Inc. led the percentage decline in the group, with its stock shedding $1.95, or 2.7 percent, to $69.47 on the NYSE.
Oil refiners took a hit, as well. Refiners' crack spreads _ or the difference between the price refiners pay for crude oil and the selling price of refined products _ have contracted sharply, from a peak of $22.17 on April 25 to about $14 today, said Read.
Valero Energy Corp., the nation's largest independent refiner, saw its shares dip 47 cents to $64.53 on the Big Board, while refiner Tesoro Corp. shares fell 65 cents to $70.36.
Shares were down broadly among independent oil and natural gas producers. Large independent Devon Energy Corp. traded 30 cents lower at $62.96. EOG Resources Inc. shares fell $2.37, or 3.1 percent, to $73.94 on the NYSE, while XTO Energy Inc. shares lost 70 cents to $42.85.
A barrel of crude oil was quoted down $1.19 to $68.75 in late-day trading on the New York Mercantile Exchange. Gasoline futures fell about 2 cents to $1.98 a gallon. Natural gas lost 27 cents to sell at $6.64 per thousand cubic feet.
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