Oil and gas stocks opened slightly lower Tuesday, caught in a broad market downturn on new concerns over the slowing U.S. housing industry as lower crude oil prices withdrew underlying support.
In early trades, the Amex Oil Index (XOI : 1,220.62, -2.29, -0.2% ) was off 0.2%, threatening to break a six-day winning streak. The Amex Natural Gas Index (XNG : 475.04, -1.25, -0.3% ) was down 0.3%, and the Philadelphia Oil Service Index ($OSX : 215.87, -1.44, -0.7% ) was down 0.8%.
The market got off to a shaky start on news that homebuilder Lennar Corp. posted a 73% drop in first-quarter profit, citing "overall weakness" in the U.S. housing market. The report comes on the heels of Commerce Department data Monday that housing starts in February were down nearly 4%, a far steeper drop than the 1% economists expected.
Glum news from the housing sector was weighing on the broad market, pushing the Dow Jones Industrial Average (.DJI :12,391.77, -77.30, -0.6% ) 67 points lower to 12,401. But it also hurts energy as it's widely seen as an indicator of energy demand.
May crude-oil futures on the New York Mercantile Exchange were down 10 cents at $62.79 a barrel, moving up from an earlier low of $62.24. Heightened tensions between Britain and Iran over 15 British naval personnel in Iranian custody since Friday continue to underpin the crude market, keeping in place a hefty a risk premium in futures prices. See Futures Movers.
