Energy stocks move broadly higher Energy stocks took their cue from the overall market's Wednesday rally as indexes tracking the oil and gas sectors showed strength and crude-oil futures traded at a one-year high.
Marathon Oil (MRO :55.20, -1.80, -3.2% ) was conspicuous by its weakness in the wake of an acquisition valued at more than $6 billion as well as the company's second-quarter financial results.
Overall, the Amex Natural Gas Index (XNG :489.33, -2.67, -0.5% ) set the pace, adding 2% to 501.66 amid bets that a wave of summer heat from Chicago to New York, plus a couple of possible hurricanes in the works in the Caribbean, could stoke demand. The Philadelphia Oil Service Index ($OSX :271.30, -1.53, -0.6% ) rose 1.7% to $277.43, amid fresh expectations for more consolidation in the sector.
The Amex Oil Index (XOI : 1,362.51, -14.97, -1.1% ) advanced 1.1% to 1,393 and the CBOE Oil Index (OIX :751.17, -6.67, -0.9% ) added 1.4% to 768.27.
Shares of Marathon fell 2% to $55.84. Earlier, the company announced a deal to buy Western Oil Sands for $6.2 billion and weighed in with its latest profit report. Also in the wake of quarterly results, shares of Valero Energy (VLO :67.01, -2.06, -3.0% ) eased 32 cents to $68.75.
Valero reported 18% growth in second-quarter profit, as the refiner's revenue fell to $24 billion from $26 billion. Profit increased to $3.89 a share, ahead of the average forecast of $3.76 a share derived in a survey of analysts by Thomson Financial.
In energy trading, oil futures rose to $78 a barrel, its highest level in a year. Meanwhile, Bear Stearns analysts said in a note to clients that she expects consolidation in the oil services and equipment sector.
"The oil service and equipment industry will soon experience a transformation through mergers and acquisitions," Bear Stearns said. "The catalysts are an acute skilled labor shortage, a high-stakes race for technological leadership, overcapitalization, and undervaluation."
Bear Stearns' list of acquisition targets include Grant Prideco (GRP :56.10, -0.50, -0.9% ) , Pride International (PDE :35.05, -0.11, -0.3% ) , Noble Corp. (NE : 102.46, -0.24, -0.2% ) , Rowan (RDC :42.19, -0.20, -0.5% ) and Dresser-Rand (DRC :37.10, +0.47, +1.3% ) .
by Steve Gelsi
by Steve Gelsi