After a wobbly start, oil and gas stocks found their footing and marched higher Monday, drawing support from firmer commodity prices and another uptick for the Dow industrials into record territory.
In early action, the Amex Oil Index ($XOI : 1,274.09, +2.34, +0.2% ) was up 0.7%, adding to last week's gains to hit an all-time high of 1,281 points.
The Amex Natural Gas Index ($XNG : 495.38, +2.70, +0.5% ) was ahead 0.6% and the Philadelphia Oil Service Index ($OSX : 225.44, +1.30, +0.6% ) was up nearly 1.2%. Crude oil for June delivery, now the front month, was up 10 cents at $64.21 a barrel on the New York Mercantile Exchange. Fears that violence following weekend elections in Nigeria could spread to the nation's oil fields were the latest factor firing up the bulls in the New York trading pits. See Futures Movers.
Exxon Mobil Corp. (XOM : 9.31, -0.45, -0.6% ) , the world's biggest publicly traded oil company, was downgraded by Deutsche Bank to hold from buy on concern about first-quarter earnings and valuation.
"With Exxon within 2% of our $80 price target, and at a 25% premium to [our] net asset value ... we are cutting the stock to hold. We see the integrated oil group as approaching a difficult set of earnings over the coming week, with mixed capture of what has appeared to be a super-strong environment," Deutsche Bank analyst Paul Sankey said in a research note.
Exxon Mobil is set to release its first-quarter earnings report on Thursday, April 26. Wall Street analysts are looking for net income of $1.51 a share, according to Thomson Financial. Sankey went on to say that while headlines have been highlighting a surge in gasoline prices and strong refining margins, few of the big producers have been enjoying the full benefit from the current market conditions due to refinery outages and wild swings in price differentials for crude-oil prices.
Venezuela's move to boost ownership in domestic oil-field development projects at the expense of big foreign operators like Exxon adds more uncertainty to the mix, compounded by a warm winter and weak energy sales in Europe, Sankey added. Shares of Exxon Mobil, one of the 30 Dow industrials, were last trading up 13 cents at $79.89, a record.
by Jim Jelter (MarketWatch)
Valero Energy Corp. (VLO : 68.11, +2.17, +3.3% ) was among the leading percentage gainers in the oil group, up 2.6% at $67.63 a share after getting a nod of confidence from FBR Research, which reiterated its outperform rating on the stock.
"We believe management is likely to announce that current consensus expectations are too low," FBR said in a note. Valero reports first-quarter earnings on Thursday. Analysts polled by Thomson Financial expect the refiner to report net income of $1.81 a share.
Valero Energy Corp. (VLO : 68.11, +2.17, +3.3% ) was among the leading percentage gainers in the oil group, up 2.6% at $67.63 a share after getting a nod of confidence from FBR Research, which reiterated its outperform rating on the stock.
"We believe management is likely to announce that current consensus expectations are too low," FBR said in a note. Valero reports first-quarter earnings on Thursday. Analysts polled by Thomson Financial expect the refiner to report net income of $1.81 a share.
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