ESV upgraded to "Strong Buy" by Deutsche Alex Brown.
Monday June 12, 12:58 pm Eastern Time
Energy stocks shine with soaring crude, gas prices
NEW YORK, June 12 (Reuters) - Shares of Exxon Mobil Corp. (NYSE:XOM - news), Schlumberger Ltd. (NYSE:SLB - news) and other U.S. energy companies bolted higher on Monday as crude oil and natural gas prices showed no signs of slowing their bull run.
The three largest U.S. oil companies raced ahead of the broader stock market, with Exxon Mobil Corp. (NYSE:XOM - news) up 1-13/16 to 81, Chevron Corp. (NYSE:CHV - news) up 2-1/4 to 94-3/16, and Texaco Inc. (NYSE:TX - news) 1-3/4 higher at 59-1/2.
By contrast, the Dow Jones industrial average slipped to 10,607 by midday, down 6.37 points.
The rise in energy stocks came after U.S. crude oil prices hit $31.50 a barrel and natural gas prices climbed to $4.255 per million British thermal units on the New York Mercantile Exchange, about double what they were just a year ago.
What's more, worldwide crude oil prices are now at their highest level since the Organisation of Petroleum Exporting Countries (OPEC) agreed in March to raise output by seven percent.
While OPEC is set to hold a ministerial meeting on June 21 in Vienna, it doesn't appear any additional supply will hit the markets before then.
The cartel last week decided against putting an extra 500,000 barrel per day of oil on the market even as prices rose above a threshold it agreed in March would trigger additional production.
Together, soaring crude oil and natural gas prices should make for big profits over the coming quarters for companies throughout the industry, analysts said.
Indeed, Deutsche Banc Alex.Brown analyst Michael Young estimates that integrated oil companies -- those that produce oil as well as refine it into gasoline, heating oil and other products -- could see second quarter earnings rise 200 percent from a year ago.
Oil service and drilling companies should also benefit from soaring commodity prices, a prospect which has been behind a six-month rally in the stock market.
Since last December, the Standard & Poor's index of oil drillers -- which includes Schlumberger, Halliburton Co. (NYSE:HAL - news) -- has risen more than 50 percent to 4,533 points.
On Monday, Schlumberger was up 2-3/8 at 73-7/8, Halliburton rose 2-1/16 to 47-3/4, and Rowan Co Inc (NYSE:RDC - news) jumped 2-3/8 to 31-1/2 on the New York Stock Exchange as Deutsche Banc Alex.Brown's Wes Maat upgraded the entire oil services sector from ``market perform'' to ``strong buy'' in a research report. |
