MW: Petroleum shares extend hot streak as oil rises
Shares of natural gas and petroleum producers extended their hot streak on Monday as the sector tapped into a rise in oil prices in recent weeks.
Crude prices gained 23% in the past week -- the largest jump in 22 years, according to Pritchard Capital Partners.
Oil service stocks have risen 22% since a low point on Dec. 5. Exploration and production stocks are up 33% from their Nov. 21 lows.
Catalysts for higher energy prices include the conflict in Gaza between Israel and Hamas, a call from Iran to cut off oil sales to countries that support Israel, and Russia's natural gas dispute with Ukraine.
Against this backdrop, crude prices rose 60 cents to $46.94, after dipping during the session on strength in the U.S. dollar. See Futures Movers.
The Amex Oil Index rose 0.6% to 1,025. The Amex Natural Gas Index rose 1.3% to 400. The Philadelphia Oil Service Index traded fractionally higher at 131.
Among energy stocks in the spotlight, Chesapeake Energy Corp. rose 3% to $17.76. The company said it sold volume from various assets in the Anadarko and Arkoma Basins for $412 million, conveying a royalty interest to investors associated with Argonaut Private Equity.
Assets sold include proved reserves of approximately 98 billion cubic feet equivalent. Under the deal, termed a "production payment transaction," Chesapeake retains drilling rights on the properties below currently producing intervals. The Oklahoma City-based natural gas company said the move was part of efforts to build up cash reserves. The purchase was financed by GS Loan Partners, an affiliate of The Goldman Sachs Group, Inc.
Soleil Securities on Monday downgraded Tesoro Corp. to sell from hold after a 64% run-up in the refining giant's share price in the past month.
Tesoro could be facing threats from imports now that Reliance Petroleum's Jamnagar refinery in India has started up. Refining margins on the West Coast improved in the second half of December because of lower production, but refinery utilization rates have been rising and demand remains weak, Soleil noted.
Shares of Tesoro nevertheless rose 1% to $13.94.
