eNergy Stocks: Oil stocks turn higher; hold tight ranges

by Jim Jelter

Energy stocks pulled to a slightly higher close Tuesday, seesawing through the session in a narrow trading band as the market awaits fundamental direction from weekly U.S. fuel supply data, set for release Wednesday.

At the close, the Amex Oil Index ($XOI : 1,272.94, +1.87, +0.1% ) was up 0.2% at 1,272.9 points, the Philadelphia Oil Service Index ($OSX : 234.07, +1.39, +0.6% ) rose 0.6% to 234.1, and the Amex Natural Gas Index ($XNG:491.69, +2.34, +0.5% ) was up 0.5% at 491.7, all reversing earlier losses.

Crude-oil futures for June fell $1.31 to $64.40 a barrel on the New York Mercantile Exchange on industry expectations that the Energy Department's weekly inventory report will show a rise in available supplies. Gasoline stockpiles, on the other hand, are seen falling further, keeping upward pressure on gasoline futures and on refiners to turn out more product. See Futures Movers.

John Browne, beleaguered chief executive of BP Plc (BP :67.32, +0.03, +0.0% ) , resigned Tuesday after failing to block media accounts in which his former partner claims Browne misused company funds. Browne has denied these allegations. The move brings Tony Hayward, his designated replacement, into the CEO position three months earlier than planned. See full story.

BP stock took the news in stride, with U.S.-traded shares closing unchanged at $67.32.
As promised, Venezuela's President Hugo Chavez ordered state oil workers to take control of the Orinoco River basin's oil fields at midnight Tuesday, securing a minimum 60% state ownership in the fields. The move affects production-sharing agreements held by foreign operators Exxon Mobil Corp. (XOM :79.66, +0.28, +0.4% ) , Chevron Corp. (CVX :78.35, +0.56, +0.7% ) , ConocoPhillips (COP : 69.19, -0.16, -0.2% ) , BP, France's Total SA (TOT : 73.68, -0.01, 0.0% ) and Norway's Statoil ASA (STO :28.19, +0.12, +0.4% ) .

All of the companies, with the exception of ConocoPhillips, have agreed to cede control of the fields to state oil company Petroleos de Venezuela SA.

According to media reports, the companies have until June 26 to hammer out terms of the takeover, including compensation. While the companies face reduced stakes in the fields, Venezuela is encouraging them to continue playing an active role in their development.

The Orinoco Basin is home to vast deposits of heavy crude oil requiring special production technology. Because of the extra costs associated with pumping and refining heavy crude, it is much cheaper than higher grade crudes, though refiners are increasingly adjusting their plants to be able to process Orinoco crude and take advantage of that discount.
Meanwhile, earnings reports continued to trickle in.

Marathon Oil Corp (MRO : 101.27, -0.28, -0.3% ) shares fell 0.2% to $101.27 after the company reported a first-quarter profit of $717 million, or $2.07 a share. While the results were less than the $784 million earned a year ago, they nonetheless topped the $1.93 a share analysts polled by Thomson Financial had expected. See full story.

EOG Resources Inc. (EOG : 76.35, +2.91, +4.0% ) shares were among top percentage gainers in the session, up 3.2% to close at $75.78. The company reported late Monday first-quarter net earnings of $217.7 million, or 88 cents a share, down 49% from a year ago. Excluding one-time item, however, the results were $1.11 a share, topping the $1.03 analysts had expected.
The Houston-based gas producer said it sees capital spending this year of about $3.4 billion. The results triggered an upgrade to overweight from JP Morgan and a buy rating from Sterne Agee.

Anadarko Petroleum Corp. (APC : 46.27, -0.44, -0.9% ) shares fell 0.8% to $46.27, a counterbalance to EOG in the gas group. Anadarko reported late Monday an 84% drop in first-quarter earnings. The company late Monday posted net income of $105 million, or 23 cents a share, down from $661 million, or $1.42 cents, a year ago. Analysts had been looking for 72 cents a share.

Much of Anadarko's decline was linked to a windfall profit tax levied by Algeria and unrealized losses on derivatives. Revenue was up 58%, however, at $2.68 billion.



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