Further declines in crude-oil prices and a couple of downgrades in the oil services business kept the lid on energy stocks Monday.
After skidding lower at the open, most of the sector managed to pare losses through the day. But underlying oil prices remained a hurdle, falling to a seven-week low. Crude oil for June delivery ended the day 46 cents lower on the New York Mercantile Exchange at $61.47 a barrel, feeling the effects of a gradual rise in supplies worldwide. See Futures Movers.
The Amex Oil Index ($XOI : 1,296.57, -1.62, -0.1% ) ended the day with a 0.1% loss at was flat at 1,296.6 points, with Exxon Mobil Corp. (XOM : 80.83, +0.28, +0.3% ) leading percentage gainers in the group, up 0.4% to $80.83 a share. Refiner Valero Energy Corp. (VLO : 72.48, -0.87, -1.2% ) led percentage decliners, down 1.2% to $72.48.
The Philadelphia Oil Service Index ($OSX : 239.01, -0.87, -0.4% ) fell 0.4% to 239 points. In addition to weaker crude prices, the sector got hit by a couple of downgrades from A.G. Edwards.
Before the open, the broker cut GlobalSantaFe Corp. (GSF :64.09, -1.05, -1.6% ) to hold from buy, citing valuation. The move sent GlobalSantaFe shares 1.6% lower to $64.09, giving it the biggest percentage loss in the group. Just last week the drilling contractor reported doubling its first-quarter net income on a 33% jump in revenue.
Transocean Inc. (RIG : 89.25, -1.06, -1.2% ) , the giant offshore rig owner, got similar treatment, cut by A.G. Edwards to hold from buy as the incremental gains from a massive contract backlog in the industry slowly unwinds. Transocean shares fell 1.2% to $89.25.
In other news, Chevron Corp. (CVX : 79.58, +0.28, +0.4% ) reported shutting about 42,000 barrels a day of production in Nigeria following political unrest that threatens four fields in the Niger Delta region. Last week, a floating oil storage vessel working for Chevron in Nigeria's Bayelsa state was attacked by militants who took six hostages. A recent flare-up in violent protests aimed at foreign oil companies operating in the Niger delta region has reduced output from the country, a member of the Organization of Petroleum Exporting Countries, by about 650,000 barrels a day.
