MW: Energy stocks move up despite inventory surprise
Energy stocks reversed course and rose with the broad market on Wednesday despite an unexpected increase in U.S. gasoline supplies.
The Amex Oil Index rose 0.2% to 853. The Amex Natural Gas Index rose 0.8% to 348. The Philadelphia Oil Service Index jumped 1.1% to 125, moving ahead of its starting point for the year of 122 points.
Sector leaders Exxon Mobil and Chevron fell 0.7% and 0.1% respectively. Both oil majors are part of the 30 stocks in the Dow Jones Industrial Average which rose 30 points.
Crude-oil futures fell $1.62 to $48.04 after government data showed a surprising increase in U.S. gasoline inventories as demand fell. Gasoline inventories increased 2.2 million barrels in the week ended March 27, the Energy Information Administration reported.
Analysts surveyed by Platts had expected a decline of 1.8 million barrels. See Futures Movers.
Among energy stocks in the spotlight, BP dropped 0.8% to $39.77 after Goldman Sachs downgraded the oil major to sell. Goldman Sachs downgraded BP to sell from neutral.
"We expect BP production to decline by roughly 2% per annum after 2010 and this is not reflected, in our view, by a premium valuation versus the rest of the sector," the broker said.
It also lifted its Brent crude oil price assumption for 2009 by 12% to $50.20 a barrel, citing reduced OPEC supply, accelerating non-OPEC supply reductions, and moderating year-over-year demand declines
Separately, the U.S. attorney general late Tuesday filed charges against BP Exploration (Alaska) Inc., a unit of oil major BP, for alleged violations of the Oil Pollution Act of 1990, Federal Pipeline Safety Laws and other laws, stemming from two spills and asbestos handling during the clean-up on the North Slope of Alaska in 2006.
From March 1 to March 6, BP spilled 212,252 gallons of oil over two acres of tundra wetlands and a frozen lake at the company's Prudhoe Bay unit.
On Aug. 6, a discharge of 1,000 gallons occurred from the oil transit line in the Prudhoe Bay unit. BP is liable for up to $4,300 per barrel of oil discharged. The civil action follows a guilty plea by BP on Nov. 29, 2007, to one count of criminal negligent discharge of oil to the waters of the United States in violation of the Clean Water Act, the U.S. Attorney said.
