Hurricane Dean downgrade sends oil stocks lower. Oil and gas stocks closed lower Tuesday, extending losses in line with crude prices as Hurricane Dean appeared increasingly unlikely to seriously disrupt oil supplies. Dean, which slammed into Mexico overnight as a monster Category 5 storm packing 160 mile-per-hour winds, was downgraded to a Category 1 storm, weakening as it moves west across the Yucatan Peninsula.
According to the National Hurricane Center in Florida, the storm nevertheless remains on track to move into Mexico's Bay of Campeche. Heeding the warning, state oil company Pemex has evacuated offshore rigs in the region that pump about 80% of the country's oil.
Mexico's oil exports account for about 15% of U.S. oil supplies.
The news sent crude for September delivery down $1.65, or 2.3%, to $69.47 a barrel on the New York Mercantile Exchange, unraveling a storm premium built into prices over the past few days. October crude, which became the lead-month contract at the session's end, closed $1.39 lower at $69.57 a barrel.
The move in crude accelerated a bout of selling in energy stocks. The Amex Oil Index (XOI:1,295.29, -15.88, -1.2%) finished the day 1.2% lower at 1,295 points. The Amex Natural Gas Index (XNG:471.36, -5.86, -1.2%) dropped 1.2% to close at 471. Natural-gas futures shed another 3.7% Tuesday, adding to a 14% drop Monday as the price run-up ahead of Dean vanished. The September natural-gas futures contract closed at $5.817 per million British thermal units, down 22.3 cents and a fresh 2 1/2-year low.
The Philadelphia Oil Service Index ($OSX:0.00, 0.00, 0.0%) , after venturing into the black through much of the morning, was back in the red at the close, down 1.3% decline at 251.8 points.
Among individual stocks, refiners Valero Energy Corp. (VLO:63.11, -0.92, -1.4%) and Hess Corp. (HES:56.87, -1.60, -2.7%) were again among the sector's poorest performers as it became clear Dean poses little or no threat to U.S. operations. Hess shares fell 2.7% to $56.87 while Valero lost 1.4% to $63.11.
Exxon Mobil Corp. (XOM:83.15, -1.38, -1.6%) , also a Dow Jones Industrial (.DJI:13,090.86, -30.49, -0.2%) component, fell 1.6% to $83.15. Shares of Chevron Corp. (CVX:84.30, -0.59, -0.7%) , the No. 2 U.S. oil company, shed 0.7% to $84.30, and No. 3 ConocoPhillips (COP:78.24, -1.62, -2.0%) dropped 2% to end at $78.24.
