Energy stocks slipped back into negative territory Thursday, unable to sustain a rally fueled by a bullish report on U.S. crude supplies. The Amex Oil Index (XOI : 1,388.08, +20.22, +1.5% ) , after hitting an all-time high of 1,380 points, drifted 0.2% below the previous session's close, finishing the session at 1,367.9 points. The turnaround spoiled a mid-morning surge in oil stocks shares triggered by the Energy Information Administration's report of a 2-million-barrel drop in crude supplies last week, their first decline in a month and a half. Energy traders had expected supplies to rise.
Oil stocks surrender gains
At the same time, the EIA reported gasoline inventories rose for a fourth consecutive week, up 1.3 million barrels -- near the high end of analysts' expectations. The data set in motion a see-saw between gasoline and crude prices that lasted through the day. At the close, refiners' voracious appetite for crude carried more weight than swelling gasoline inventories, pushing July crude-oil futures 52 cents higher to $64.01 a barrel, well off their low of $62.45. See Futures Movers.
Oil stocks surrender gains
At the same time, the EIA reported gasoline inventories rose for a fourth consecutive week, up 1.3 million barrels -- near the high end of analysts' expectations. The data set in motion a see-saw between gasoline and crude prices that lasted through the day. At the close, refiners' voracious appetite for crude carried more weight than swelling gasoline inventories, pushing July crude-oil futures 52 cents higher to $64.01 a barrel, well off their low of $62.45. See Futures Movers.
The Philadelphia Oil Service Index ($OSX : 252.25, +1.14, +0.5% ) , caught up in the equities sell-off, fell 0.7% to close at 251.1 points, while the Amex Natural Gas Index (XNG :516.48, +1.36, +0.3% ) dropped 0.5% to 515 points, snapping a three-day winning streak.
Despite a dull ending, May was a blockbuster for energy stocks. The Amex Oil Index exited the month with a 7.6% gain, the Amex Natural Gas Index rose 5.3%, and the Oil Service Index rose 7.9%, all outpacing a 3.3% advance by the S&P 500 Index (SPX : 1,536.34, +5.72, +0.4% ) . Among individual equities in the oil index, heavyweights of Exxon Mobil Corp. (XOM : 84.22, +1.05, +1.3% ) fell 1% to $83.17 Thursday and Chevron Corp. (CVX : 82.23, +0.74, +0.9% ) dropped 0.9% to $81.49. ConocoPhillips (COP : 78.86, +1.43, +1.8% ) managed to eke out a 0.2% gain to finish at $77.43. Marathon Oil Corp. (MRO :126.76, +2.95, +2.4% ) continued to pile on the gains, a day after the company announced it plans to buy back an additional $500 million in stock by the end of the year.
This follows completion of a $2.5 billion buyback plan. Marathon shares advanced 1.4% to $123.81, hitting an all-time high of $124.76 along the way. Meanwhile, Banc of America Securities leveled a big downgrade at ethanol producers Thursday, predicting that the market faces a 70% decline in margins as a "relentless supply" of new ethanol production floods the market.
Andersons Inc. (ANDE :40.23, +1.13, +2.9% ) , VeraSun Energy (VSE : 15.76, +0.57, +3.8% ) , Pacific Ethanol (PEIX :13.30, -0.16, -1.2% ) and Aventine Renewable Energy (AVR : 17.16, +0.33, +2.0% ) were all cut to sell from neutral by Banc of America analyst Eric Brown. The note sent all of the stocks sharply lower, led by an 8.7% drop for VeraSun shares to $15.19. See full story.
Meanwhile, President George W. Bush unveiled his long-term strategy on global warming, calling for the world's 15 biggest polluters -- including emerging industrial giants China and India -- to set global emissions goals by the end of 2008. Bush, who has rejected other leading industrial nations' efforts to set greenhouse gas targets, will take his plan to Germany next week for further discussions with the Group of Eight nations gathering there. See full story
Aventine Renewable
stocks
China
Marathon Oil
VeraSun Energy
Pacific
Ethanol
George W. Bush
