Energy stocks pile on gains
Energy stocks extended their advance through the session Friday, taking direction from a 111-point rebound in the broader stock market and a bullish International Energy Agency report that raised concerns about tight crude-oil supplies over the next few months.
But the gains were not enough to undo damage from Thursday's big sell-off, leaving most of the sector with losses for the week. At the close, the Amex Oil Index (XOI : 1,296.86, +23.75, +1.9% ) was up 1.9% at 1,296.8 points, recovering what was lost in the previous session but finishing the week with a 0.1% loss. The Amex Natural Gas Index (XNG : 495.48, +6.25, +1.3% ) rose 1.3% to 495.5 points, down 1.1% from a week ago. Bucking the trend was the Philadelphia Oil Service Index Philadelphia Oil Service Sector Index ($OSX :241.88, +7.03, +3.0% ) , up a whopping 3% Friday to 241.9 points, a 0.8% gain for the week. The monthly report from the Paris-based IEA again warned that oil supplies will be stretched to keep pace with demand this summer, when gasoline sales peak. Most analysts are predicting continued upward pressure on crude prices as refiners step into high gear to meet that demand, promising plenty of work for drilling units.
That logic played out in oil services stocks Friday, where drilling contractor GlobalSantaFe Corp. (GSF : 66.93, +3.46, +5.5% ) led the pack on a 5.5% jump to $66.93 a share, touching an all-time high of $66.99 in the process.
Noble Drilling Corp, (NE : 88.32, +3.54, +4.2% ) rose 4.2% to $88.32 and National Oilwell Varco Inc. (NOV : 91.71, +3.32, +3.8% ) rose 3.8% to $91.71 a share, an all-time high for the stock.
"Gasoline stocks are tight and may tighten further in June unless refinery capacity rises more sharply than current forecasts suggest," the IEA said. Market concerns over low gasoline inventories have already produced a sharp rise in the futures market, where reformulated gasoline for June delivery is now fetching $2.33 a gallon.
Oil companies in the U.S. have grown increasingly dependent on overseas refiners to close the gap in gasoline supplies. But if prices trend much higher, many analysts are predicting demand will see a measurable decline as consumers back away from the pump. According to the AAA, the average price of regular unleaded gasoline nationwide stands at $3.04 a gallon, just a penny less than the record high hit in September 2005.
Amid this bullish pricing scenario, refiners and the big international oil companies were understandably among Friday's biggest gainers. Hess Corp. (HES :58.48, +1.63, +2.9% ) and Occidental Petroleum Corp. (OXY :51.93, +1.45, +2.9% ) set the pace, each up 2.9% to $58.48 and $51.93 a share, respectively.
Occidental also benefited from the announcement that it plans to sell all of its holdings in Lyondell Chemical Co. (LYO :36.75, +3.68, +11.1% ) , a move it estimated will bring in $200 million. Lyondell shares in turn jumped 11% to $36.75 amid speculation that Occidental's move effectively makes Lyondell a potential takeover target. Exxon Mobil Corp. (XOM :81.23, +1.84, +2.3% ) , part of the Dow Jones Industrial Average, rose 2.3% to $81.23, lending strong support to the Dow. See Market Snapshot.
Chevron Corp. (CVX :80.04, +1.85, +2.4% ) , the No. 2 U.S. oil company after Exxon, rose $2.4% to $80.04.
Other big movers Friday included refiner Sunoco Inc. (SUN : 74.45, +1.31, +1.8% ) adding 1.8% to $74.45, and Valero Energy Corp. (VLO : 73.83, +1.24, +1.7% ) , up 1.7% to $73.83.
In energy trading, crude-oil for June delivery rose 56 cents to $62.37 a barrel on the New York Mercantile Exchange, good for a 0.7% gain from a week ago. The June reformulated gasoline contract rose 2.6 cents to $2.352 a gallon, its highest closing price since last August. For the week, the gasoline contract jumped 6.1%. See Futures Movers.
