Oil and gas stocks posted modest gains Thursday, with the Amex Oil Index overcoming a drop in crude prices to hit an all-time high. At the close, the Amex Oil Index ($XOI : 1,242.59, +6.63, +0.5% ) was up 0.5% at 1,242.6 points, setting an intraday high of 1,245.8. The index rose 2.1% in the shortened work week.
The Philadelphia Oil Service Index ($OSX : 219.83, +0.44, +0.2% ) ended the session with a 0.2% advance to 219.8 points, up 2.4% for the week, while the Amex Natural Gas Index ($XNG : 485.98, +1.84, +0.4% ) gained 0.4% to 486 points, a 2.6% gain from last Friday's close.
The U.S. stock and commodities markets will be closed for Good Friday. May crude-oil futures in New York fell 10 cents to $64.28 a barrel on the New York Mercantile Exchange after venturing as low as $63.60. Much of the upward momentum propelling crude prices over the past week dissipated with Iran's release Thursday of the 15 British sailors and marines seized March 30 for allegedly straying into Iranian waters.
Meanwhile, energy traders turned their attention to gasoline futures after the Energy Department's report Wednesday of an unexpectedly steep drop in gasoline inventories last week. The report raised concerns about refiners' ability to keep pace with demand when the summer driving season opens off at the end of May. See Futures Movers.
The May reformulated gasoline contract rose as high as $2.1325 a gallon on Nymex before closing up 2.34 cents at $2.1288, a closing level not seen since Aug. 31.
The possibility of slim gasoline supplies again favored refiners Thursday, with Sunoco Inc. (SUN : 74.17, +0.95, +1.3% ) leading the pack on a 1.3% rise to $74.17 a share.
Among the biggest players in the Amex oil group, Exxon Mobil Corp. (XOM : 77.22, +0.11, +0.1% ) rose 11 cents to $77.22 a share, Chevron Corp. (CVX : 75.61, +0.06, +0.1% ) rose 6 cents to $75.61 and ConocoPhillips (COP : 67.96, +0.22, +0.3% ) gained 22 cents to end the session at $67.96. Lehman Brothers analyst Jeffrey Robertson issued an upbeat pre-market note on mid-cap U.S. exploration and production companies.
"We believe producers could be poised to deliver some improvement in operating and financial results this year after a challenging 2006, which included declining gas prices along with increasing costs. Moderating cost pressures should be a key factor in bringing drilling economics back in-line with current commodity prices," Robertson said.
Among mid-cap E&P companies best positioned to develop and book proved reserves are ATP Oil & Gas Corp. (ATPG : 39.02, +0.75, +2.0% ) , Swift Energy Co. (SFY : 41.14, +0.14, +0.3% ) , and Plains Exploration & Production (PXP :45.48, -0.35, -0.8% ) , he added.
UBS analyst Ronald Barone raised his natural gas price outlook, predicting the commodity is likely to fetch $6.50 per million British thermal units in the near-term spot market, up from $6. He based the upward revision on higher costs driving up producer prices and an increasingly bullish supply-demand outlook, based in part on growing demand for gas for power generation.
