Broad market gains, storm watch lift energy stocks . By mid-afternoon, the Amex Oil Index was much 1.8% higher at 1,371 points, backing down slightly from a 2% jump in opening trades. The move puts the index on track for a gain this month of just under one percent.
Meanwhile, the Philadelphia Oil Service Index charged ahead 2.3% to 274.5 points and the Amex Natural Gas Index was up 1.5% at 478, with both indexes down slightly from early session highs.
Behind Friday's upswing an enthusiastic response by Wall Street to separate speeches by Federal Reserve Chairman Ben Bernanke and President George W. Bush that assured investors the government is prepared to take steps to stem the growing number of mortgage defaults and bring some relief to the hard-pressed credit market.
Energy stocks, like the rest of the equities market, were also reacting to tame July inflation data, which is seen by many analysts as increasing the likelihood of another rate cut by the Federal Reserve when it meets on Sept. 18.
Meanwhile, crude for October delivery was up 55 cents at $73.91 a barrel, backing off an earlier high of $74.44. The upward bias stemmed in part from reports from the National Hurricane Center that a tropical storm could be gathering in the Atlantic.
While still too early to know if the weather system poses any threat to offshore fields, traders were already adding a storm premium to energy futures on the possibility it could intensify over the long Labor Day weekend.
Apart from Dean, which swept through the Caribbean well south of U.S. oil and gas rigs, the 2007 hurricane season has been relatively calm. But the season is far from over, and September tends to be the busiest month for named tropical storms. Oil service companies were among the stocks showing the steepest gains Friday, led by a 3.6% leap by National Oilwell Varco Inc. to $127.87 a share. The stock hit a 52-week high of $131.73 earlier in the session.
Baker Hughes , in its weekly rig activity report, said the number of rigs drilling for oil and gas in North America fell by one to 2,134. While that was 97 more than were working in the U.S. a year ago, the total fell a whopping 200 in Canada.In the alternative fuel sector, UBS cut target prices and earnings estimates on ethanol producers Verasun Energy Corp., US Bioenergy Corp. and Aventine Renewable Energy , citing concerns about oversupply. UBS trimmed its 2008 ethanol price forecast to $1.87 a gallon from $1.99, erasing what the broker earlier had predicted would be a 30-cent per-gallon premium over gasoline.
by Jim Jelter
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