3/21 Oil-service firms inch higher
marketwatch.com
NEW YORK (CBS.MW) -- Most oil-service stocks climbed Thursday despite a minor decline in
last week's natural gas supplies as some traders bet that recent declines in U.S. drilling
activity and a recovery in demand later this year will put a strain on inventories.
Late Wednesday, the American Gas Association reported a 50 billion cubic
foot decline in natural gas inventories to total 1.558 trillion cubic feet. Inventories
are still well above the year-ago level of 688 billion cubic feet. See full story.
However, "U.S. drilling activity has continued to slide despite the
substantial rebound in spot prices," Ronald Barone, an analyst at UBS
Warburg, said in a daily note.
The U.S. natural gas rig count for the week ending March 15 fell 14 units to
610, compared with 900 last year, according to Barone.
The decline is "likely indicative of producers wanting to see a sustained
period of improved spot prices before committing materially more capital to
exploration programs," he said.
Additionally, "portfolio managers are starting to look at first quarter earnings,"
said Justin McNichols, a portfolio manager at Osborne Partners Capital
Management. "Oil service looks intriguing since most companies on the
service side have low Q1 earnings risk."
On Thursday, the Philadelphia Oil Service Index (OSX: news, chart, profile)
rose to 103.09, up 1.6 percent.
Within the index, shares of Nabors Industries (NBR: news, chart, profile)
climbed by 92 cents to $42.07 and shares of Varco International (VRC:
news, chart, profile) added 47 cents to $19.27.
Meanwhile, The CBOE Oil Index ($OIX: news, chart, profile), a key gauge of
integrated oil stocks, stood at 329.91, up 0.1 percent.
Among index components, ChevronTexaco (CVX: news, chart, profile) added 66 cents to stand at $90.46
and U.S.-traded shares of BP (BP: news, chart, profile) were at $52.70, up 22 cents, while ExxonMobil
(XOM: news, chart, profile) fell 2 cents to stand at $43.51.
Crude rises back to six-month high
Over on the futures market Thursday, crude for May delivery closed back at a six-month high as a
breakdown in peace talks in the Middle East renewed the possibility of a disruption in oil supplies.
Strength in petroleum product demand also pointed to a recovery in demand sometime this year.
"Middle East headlines trump all other considerations," said Mike Armbruster, an analyst at Altavest
Worldwide Trading, noting that Israel pulled out of the peace talks due to another suicide bomber
attack. See full story.
"The market is very nervous and a non-stop string of suicide bombers in Israel will keep crude on
edge," he said.
On the New York Mercantile Exchange, the May crude contract fell to a low at $24.60 a barrel before
rebounding to close at $25.61, up 66 cents. See Futures Movers.
Also this week, the American Petroleum Institute posted a 3.8 million-barrel fall in gasoline
inventories as of the week ended March 15. The API, however, upwardly revised its week-ago data by
1.3 million barrels to partially offset the 3.4 million-barrel decline that had been originally reported.
The Energy Department said supplies fell by 2.4 million barrels.
Distillate supplies, which include heating oil and jet fuel, fell by either 2.9 million or 2.5 million barrels
in the latest week, according to the API and Energy Department, respectively, compared with
analysts' expectations for a fall of 1.65 million barrels. See full story.
Energy stocks mostly higher
Elsewhere in the energy complex, shares of other energy-related stocks traded mostly higher.
Shares of Calpine (CPN: news, chart, profile) climbed by $1.22 to $14.26, Southern Company's (SO:
news, chart, profile) stock tacked on 46 cents to $26.75 and shares of Williams Cos. (WMB: news,
chart, profile) rose $1.01 to $24.40. Shares of Reliant Resources (RRI: news, chart, profile) added 70
cents to close at $16.91 and those of parent Reliant Energy (REI: news, chart, profile) climbed by 59
cents to $25.89.
Shares of Dynegy (DYN: news, chart, profile), however, fell by 5 cents to $31.95.
Meanwhile, shares of Enron (ENRNQ: news, chart, profile) closed unchanged at 21. See related
story.
Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco. |
