Oil and gas stocks closed lower Tuesday, with investors viewing weaker crude prices and an 80-point drop on the Dow Jones Industrial Average as a good excuse to lock in gains from the sector's recent rally.
At the close, the Amex Oil Index (XOI : 1,397.58, -9.08, -0.6% ) was off 0.7% at 1,397 points, whittling down its 1.3% advance on Monday and slipping back beneath the 1,400-mark it first crossed Monday. The sector was trapped in a narrow range, however, with Hess Corp. (HES : 59.57, -0.91, -1.5% ) leading percentage decliners on a 1.5% drop to $59.57 a share. U.S.-traded shares of Royal Dutch Shell (RDSA : 76.70, +0.18, +0.2% ) topped gainers, up 0.2% to $76.70, joined by Exxon Mobil Corp. (XOM : 84.26, +0.04, +0.0% ) , which eked out a 4-cent advance to $84.26, the only other oil index component to post a gain.
Behind the pullback was an early 85-cent tumble in crude-oil prices to $65.36 a barrel in New York. Energy traders bailed out of the contract as Mideast supply disruptions caused by Tropical Cyclone Gonu, bearing down on Oman, were deemed far less likely than earlier feared. All tanker traffic out of the Gulf passes through the Strait of Hormuz into the Gulf of Oman. At last report, the massive storm -- a rare event in the Middle East -- was lashing Oman's coast with strong winds and heavy rains. Crude for July delivery ended the session with a 60-cent loss at $65.61 a barrel. See Futures Movers.
Action was somewhat subdued ahead of weekly U.S. oil supply data, to be released Wednesday. Energy traders will be looking for further signs that refiners are ramping up gasoline production, which has been lagging the historical trend for this time of year due to repair outages at several key plants. There is also a reluctance to place big bets on the sector until after the Group of Eight meets this week in Germany. Among hot-button issues are rising tensions between Moscow and Washington over U.S. plans to deploy a defensive missile system in Eastern Europe.
Meanwhile, the Amex Natural Gas Index (XNG : 524.42, -3.01, -0.6% ) fell 0.6% to 524.4 points and the Philadelphia Oil Service Index ($OSX : 257.87, -0.80, -0.3% ) slipped 0.3% to 257.9 points, both backing off gains of more than 2% in the previous session.
In the gas group, Anadarko Petroleum Corp. (APC : 51.03, -0.92, -1.8% ) led percentage decliners, down 1.8% to $51.03 a share just a day after logging a 4.6% gain on a $1.85 billion deal to sell natural gas gathering and processing systems to Atlas Pipeline Partners L.P.
