Oil and gas stocks fell Thursday as new data on China's red-hot economy and the cooling economy in the United States raised the specter of a slowdown in global energy demand.
China reported a blistering 11.1% jump in gross domestic product growth in the first quarter, much higher than most economists expected, fanning fears the country could unleash higher interest rates in a bid to ease inflationary pressures. See Asia Markets.
Such a move would temper the outlook for energy demand, given China's role as the biggest driver behind rising global energy demand over the past few years. The energy picture was further dimmed by the Conference Board's forecast for the U.S. economy. The private research group said its index of leading indicators points to a slow growth pattern that's likely to last through the summer. See full story.
The two vastly different economic outlooks had the same impact on energy stocks. At the close, the Amex Oil Index ($XOI :1,253.09, -10.28, -0.8% ) was down 0.8%, the Amex Natural Gas Index ($XNG : 486.46, -5.38, -1.1% ) fell 1.1%, and the Philadelphia Oil Service Index ($OSX : 0.00, 0.00, 0.0% ) dropped 1.1%. Crude oil for May delivery toppled $1.30 to $61.83 a barrel on the New York Mercantile Exchange. It fell as low as $61.60 overnight. See Futures Movers.
Among the biggest movers in the oil group, Occidental Petroleum (OXY :50.25, -0.87, -1.7% ) led percentage decliners with a 1.7% drop to $50.25. Sunoco Inc. (SUN :72.44, -0.95, -1.3% ) fell 1.3% to 72.44 and Chevron Corp. (CVX : 76.81, -0.96, -1.2% ) shed 1.2% to $76.81.
Exxon Mobil Corp. (XOM :77.46, -0.74, -0.9% ) , a Dow Jones Industrials component, fell nearly 1% to $77.46. There were no gainers in the group. In broker news, BP Plc. (BP :68.65, -0.29, -0.4% ) was downgraded to neutral from buy at Merrill Lynch, citing valuation after shares in the oil giant have rallied around 13% in four weeks.
"While we are optimistic on the prospects for continued recovery in the stock longer term we see little by way of catalysts that can sustain outperformance in the short term," the broker said.
BP's U.S.-listed shares fell 0.4% to $68.65.
Noble Corp. (NE : 79.07, -0.79, -1.0% ) reported first-quarter results, posting a profit of $250 million, or $1.86 a share, up from $145 million, or $1.05 a share, in the same period a year ago. The Sugar Land, Texas, oil and gas driller said revenue rose to $646.4 million from $461.9 million. The average estimate of analysts polled by Thomson Financial was for earnings of $1.79 a share on revenue of $626.9 million. Noble shares fell 79 cents, or 1%, to $79.07, in line with peers on the Oil Service Index, where every component finished the day in the red.
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