The break-out came at the end of a choppy session during which energy stocks rarely ventured more than a percentage point from their previous close, despite the Organization of Petroleum Exporting Countries' decision to boost output to ease upward pressure on oil prices.
At the close, the Amex Oil Index was up 1.4% at nearly 1,388 points. The Amex Natural Gas Index rose 1.6% to 493 and the Philadelphia Oil Service Index rose 1.5% to finish at 283 points. All three indexes had spent much of the day wallowing in negative territory, sitting out a triple-digit rally by the Dow Jones Industrial Average. The Dow made fresh headway on persistent expectations that the Federal Reserve will cut rates on Sept. 18. OPEC, meeting in Vienna, said it agreed to raise production quotas by 500,000 barrels a day from Nov. 1. The decision raises the cartel's official output level to 27.2 million barrels per day, or roughly 40 percent of the world's oil demand. It also incorporates the 900,000 bpd OPEC was already pumping in excess of its previous 25.8 million bpd quota.
On the New York Mercantile Exchange, crude for October delivery rose 79 cents to $78.28, its highest close ever. The contract had earlier dropped as low as $76.92, offering what initially was a muted reaction to OPEC's new production targets.
Among individual stocks, the big integrated oil companies posted the strongest gains while refiners lagged. Valero Energy Corp. was the only name on the Amex Oil Index to post a decline, down 0.2% at $67.90 a share.
Top gainers in the group included the ever-volatile Hess Corp., up nearly 3% to $62.44 a share, and the biggest of the oil companies, Exxon Mobil Corp. , which added 2.5% to close at $86.94.
U.S.-traded shares of Royal Dutch Shell rose 1.5% to $81.05. The Anglo-Dutch oil giant was reportedly headed toward an agreement with authorities in Argentina that would allow it to reopen a refinery there.
According to Dow Jones Newswires, Shell agreed to spend $60 million on cleanup and investments at its Doc Sud facility after Argentina's Environmental Secretariat shut it for alleged pollution and paperwork violations. It was not yet clear when final approval to resume operations at the plant would be given.
Other big moves in the sector included a 4.8% jump by oilfield equipment maker National Oilwell Varco Inc. to a new all-time high of $136.94 a share.
Via|MarketWatch|by Jim Jelter
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