RBC Capital
Oil Service Strategist -- May 2, 2005
Investment Opinion
Daily Rap
After being up 1.8% in early trading, the OSX succumbed to the drop in commodity prices and closed down 0.3% to 128.92.
Crude oil fell $2.05 to $49.72 with natural gas off 16.3 cents to $6.59.
With the help of crude oil's decline, broader markets gained on the day, with the S&P 500 and Nasdaq rising 1.2% and 1.0%, respectively.
And in contrast to oil service stocks, the XOI and XNG were able to post gains of 1.0% and 0.5%, respectively.
The Week that Wasn't
Despite a barrage of positive earnings reports and upward EPS revisions throughout the week, the OSX was unable to gain any traction.
Main culprits were economic concerns and the decline in commodity prices.
For the week, the OSX was down 6.0% versus a 0.4% gain for the S&P 500 and a 0.6% decline for the Nasdaq.
On the commodity-front, crude oil dropped 10.2% with natural gas off 8.5%.
Y-t-d, relative performance is still positive with the OSX +4.0% versus losses of 4.5% and 11.7% for the S&P 500 and Nasdaq.
The Week Ahead
This week, four companies within our coverage universe are reporting, i.e. RIG, GSF, GLBL and NOV.
Again, we expect positive commentary from conference calls with an upward bias to EPS revisions.
As we have seen over the past few weeks, we believe broader market action and macro sentiment will continue to be the key determinants to near-term oil service stock direction.
|
