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biz.yahoo.com
Thursday January 6, 6:34 pm Eastern Time
Energy stocks soar on flight from tech sector
By Andrew Kelly
HOUSTON, Jan 6 (Reuters) - U.S. energy stocks staged a broad advance on Thursday, posting gains of up to 10 percent
despite a drop in crude oil prices, as investors seeking to reduce holdings of technology stocks rediscovered the oil and gas
sectors.
While the technology-heavy Nasdaq composite index posted its third day of steep losses and February crude oil futures slipped
13 cents to $24.78 a barrel, the three biggest U.S. oil companies all saw their shares post gains of four to five percent.
ExxonMobil Corp. (NYSE:XOM - news) rose 4-3/16 to 85-3/16, Chevron Corp. (NYSE:CHV - news) was up 3-5/8 at 88-3/4 and Texaco Inc. (NYSE:TX -
news) gained 2-10/16 to 55-9/16.
But Big Oil's gains were eclipsed by some of the smaller oil companies and selected oilfield service and drilling firms.
Marathon Oil (NYSE:MRO - news) jumped 10.7 percent to 26-1/2, services firm Baker Hughes Inc. (NYSE:BHI - news) advanced 9.5 percent to 22-5/16, and
Diamond Offshore Drilling Inc. (NYSE:DO - news) shot up 8.4 percent to 29-11/16.
Equity strategists and analysts said that as technology stocks underwent a correction after huge gains last year, investors were looking to other sectors, such as
energy, that had been left behind and might provide overlooked bargains.
''I don't think it's any particular development in the energy industry. It's a rotation out of technology into stocks that offer better value,'' said Alan Skraina, strategist
at Edward Jones.
Skraina said investors who got carried away in the technology frenzy and ignored traditional measures of value were now learning that less glamorous sectors like
energy also had their merits, even if oil prices should slip a few dollars.
''At $20 a barrel, well-managed companies can make money and do well...and that's why they are participating in this move towards value,'' he said.
Trude Latimer, an independent stock strategist, said investors who were dazzled by technology stocks last year and could not be persuaded to buy energy stocks,
even as oil prices rose to $25, were now changing their tune.
''The seeds are falling in fertile ground this time...They didn't care about oil stocks last year,'' she said.
Latimer said other sectors such as retail, drugs, paper, chemicals and autos were also benefiting from the current swing back to more conventional investment
yardsticks.
Bill Meehan, a market analyst with Cantor Fitzgerald, said the global economic outlook for this year augured well for oil demand and that energy stocks, while not
cheap, offered reasonable value to investors compared with pricier sectors.
''I believe the overall market is in fairly big trouble because of the interest rate environment...But the commodity producers, some of the more cyclical areas,
including energy, will provide much better performance than technology stocks and some of the traditional defensive stocks,'' Meehan said.
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