The bulls romped through the energy sector Wednesday, charging ahead on higher crude-oil prices, a batch of generally strong earnings reports, and a rally past the 13,000 mark by the Dow Jones Industrial Average. (.DJI :13,089.89, +135.95, +1.0% )
At the close, the Amex Oil Index ($XOI :1,290.20, +25.96, +2.1% ) was ahead nearly 2.1% at 1,290.2 points, hitting an all-time high of 1,295.5 in the process, while the Amex Natural Gas Index ($XNG : 502.34, +8.73, +1.8%) added 1.8% to 502.3 points - also an all-time high.
The Philadelphia Oil Service Index ($OSX : 233.24, +7.64, +3.4% ) topped the sector with a hefty 3.4% advance to 233.2 points, powered by bullish earnings reports from Baker Hughes and Weatherford International Inc. Crude oil for June delivery resumed its upward trajectory Wednesday, up $1.26 to finish the day at $65.84 a barrel on the New York Mercantile Exchange. See Futures Movers.
Concerns over gasoline supplies ahead of the summer driving season paved the way for firmer energy prices. The Energy Department reported an 11th-straight weekly drop in gasoline supplies and nearly a 3% decline in refinery output, pushing reformulated gasoline futures to a high last seen in August 2006.
ConocoPhillips (COP :70.82, +1.18, +1.7% ) was the first of the big three U.S. oil companies to report first-quarter earnings, posting 7.7% higher profit than it did a year earlier. But the gains were built on asset sales as the company worked to reduce the debt load it took on to finance its 2006 acquisition of Burlington Resources. Excluding one-time gains, ConocoPhillips posted earnings per share of $1.83, below the $1.90 analysts expected. Sales were also down, to $41.3 billion from $46.9 billion a year earlier, largely because of lower oil and natural gas prices. See full story.
Shares of ConocoPhillips, the No. 3 U.S. oil company by market capitalization, ended the day with a 1.7% gain at $70.82. Industry giant Exxon Mobil Corp., (XOM : 79.92, +1.32, +1.7% ) which reports first-quarter results on Thursday, rose 1.7% to $79.92 a share. Chevron Corp., (CVX : 78.32, +1.22, +1.6% ) No. 2 among U.S. oil companies after Exxon, added 1.6% to $78.32.
Independent producer and refiner Hess (HES : 59.04, +1.92, +3.4% ) reported net income fell 47% to $370 million, or $1.17 a share, from $699 million, or $2.22, in the year-earlier period, which included a gain of $186 million for the sale of properties. Revenue fell to $7.4 billion from $7.5 billion. The results were in line with Wall Street expectations.
Hess shares rose 3.4% to $59.04, leading percentage gainers in the Amex oil group.
Baker Hughes (BHI : 78.51, +5.71, +7.8% ) , one of the world's biggest oil field services providers, reported first-quarter net rose 10% to $365 million, or $1.17 a share, with revenue up 20% to $2.47 billion. Analysts polled by Thomson Financial expected earnings of $1.10 a share.
The company predicted revenue growth outside North America of 19% to 21% in 2007, while U.S. sales are seen rising 7%. Capital spending is expected at $1 billion to $1.2 billion.
Baker Hughes shares soared 7.8% to $78.51 on the report, a level not seen since December. Weatherford (WFT :51.68, +3.23, +6.7% ) wasn't far behind, its shares rising 6.7% to $51.68 after reporting a 39% jump in first-quarter profit. The drilling-services company posted net rose 39% to $281.6 million, or 81 cents a share, from $203.3 million, or 57 cents.
Weatherford's adjusted earnings were 76 cents. Analysts surveyed by Thomson First Call forecast earnings of 77 cents. Sales rose to $1.9 billion from $1.5 million.
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