by Jim Jelter
Energy equities took a swift hit early Wednesday and then bounced back as crude oil prices fell below $64 a barrel on news Iran has agreed to release 15 British sailors it has held for more than a week.
Energy equities took a swift hit early Wednesday and then bounced back as crude oil prices fell below $64 a barrel on news Iran has agreed to release 15 British sailors it has held for more than a week.
The news stripped out much of the risk premium carried in the energy market since March 30, when Iranian patrol boats seized the naval personnel while on duty in the Gulf, claiming they had wandered into Iranian territorial waters while inspecting ships bound for Iraq.
Crude oil for May delivery fell as low as $63.56 a barrel on the report. It was last trading at $63.97, down 67 cents from the previous close. See Futures Movers. But pressure from the move in crude didn't pin down energy stocks for long.
The Amex Oil Index ($XOI :1,231.60, +2.49, +0.2% ) , after falling as much as 0.5%, managed to claw its way back to a 0.3% advance about an hour into trading. The Amex Natural Gas Index ($XNG :482.89, +1.06, +0.2% ) also reversed course, gaining 0.3%. The Philadelphia Oil Service Index ($OSX :219.03, -0.31, -0.1% ) was still mired in red, off 0.6%, but up from earlier losses.
In the oil group, the rally was being led by refiners. Valero Energy Corp. (VLO : 65.40, +0.80, +1.2% ) was ahead 1.4% at $65.49 a share and Sunoco Inc. (SUN : 72.00, +0.94, +1.3% ) was up 1.1% at $71.84, topping percentage gainers in the sector. Gains by refiners were helped by the latest weekly inventory data from the Energy Department's Energy Information Administration, which showed a drop of 5 million barrels in U.S. gasoline supplies to 205.2 million barrels as the nation heads into the summer driving season. It was the eighth straight week of declines in gasoline inventories.
At the same time, the EIA report showed crude-oil supplies rose by a bigger-than-expected 4.3 million barrels to 332.7 million for the week ended March 30, while distillates -- primarily heating oil and diesel fuel -- were flat at 118 million after a nine-week decline.
ConocoPhillips (COP : 67.25, -0.59, -0.9% ) , the No. 3 U.S. oil company, warned Wednesday its first-quarter daily oil and gas production would be lower than the previous quarter. The company also said exploration costs would be $275 million in the first quarter before taxes.
Conoco said its worldwide refining margins will be "significantly higher" than the fourth quarter, though narrowing crude differentials and the price premium North Sea Brent crude has enjoyed over West Texas Intermediate, the U.S. benchmark crude, is likely to hurt margins at ConocoPhillips' U.S. refineries, the company added. The Houston company also said its first-quarter results will benefit from a $500 million gain from "asset rationalization efforts."
ConocoPhillips shares were last down 50 cents, or 0.7%, at $67.34.
Dow industrials component Exxon Mobil Corp. (XOM :76.89, +0.09, +0.1% ) was down 0.3% at $76.58 a share while No. 2 Chevron Corp. (CVX :75.57, +0.23, +0.3% ) was ahead 0.1% at $75.42.
