[ENERGY STOCKS] Energy shares rise on drop in inventories

Energy stocks moved higher Wednesday as oil topped $132 a barrel for the first time on an unexpected draw down in petroleum supplies.

Phil Flynn of Alaron Trading cited supply problems from the Gulf of Mexico as fueling the latest record run in oil prices, as investors dive into the commodity to flee a falling dollar and turmoil in the financial sector. Bullish sentiment is outweighing the laws of supply and demand as traders look toward $135 a barrel as the next possible point of resistance.

The Amex Oil Index (XOI: 1,660.15, +30.06, +1.8%) rose 1.3% to 1,651. Royal Dutch Shell (RDSA: 88.40, +3.22, +3.8%) led gains among oil producers with a rise of 3.6% to $88.21. Gains accelerated after fresh data showing crude supplies falling by 5.4 million barrels to 320.4 million for the week ended May 16, according to the Energy Department Wednesday. Supplies had climbed over 12 million barrels in four weeks. Refinery utilization rose to 87.9 % of capacity from 86.6% a week ago. Following the news, July crude topped $132 a barrel for the first time.

The Amex Natural Gas Index (XNG: 749.05, +7.81, +1.1%) rose 0.5% to 745, cooling from an earlier rise of 1%. The Philadelphia Oil Service Index ($OSX: 355.01, +4.28, +1.2%) rose 0.6% to 353. National Oilwell Varco (NOV: 86.55, +5.68, +7.0%) jumped 5.3% to $85.16. Meanwhile, average U.S. retail gasoline prices continued their move into record territory on Wednesday, with a rise of a penny to $3.81 a gallon for regular unleaded, according to the Daily Fuel Gauge Report from AAA. A month ago, the average price was $3.50 a gallon and a year ago it was $3.21 a gallon.

Among movers, PETROBRAS (PBR: 76.86, +2.75, +3.7%) rose 3.2% to $76.46. On Tuesday, the company said it plans to contract 40 drilling ships and platforms to operate in deep and ultra-deep waters by 2017.

Chesapeake (CHK: 56.73, -0.53, -0.9%) fell 1.3% to $56.53 after it priced its offering of $1.2 billion of contingent convertible senior notes. The company upped the size of the deal from $500 million. The natural gas producer also announced that it priced $800 million of 7.25% senior notes.

Source: MarketWatch| by Steve Gelsi

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