Energy stocks fell back into mixed trading on Monday, with oil shares rising on an upgrade of Exxon Mobil while natural gas shares dipped into the red with the broad market.The Amex Oil Index rose 0.6% to 851. The Amex Natural Gas Index fell 0.7% to 336. The Philadelphia Oil Service Index edged up 0.2% to 119.
In the broad market, the Dow Jones Industrial Average dipped fractionally after moving up earlier in the day.
Crude prices dipped 5 cents to $39.98, paring back gains earlier in the session. See Futures Movers.
Deutsche Bank upgraded Exxon Mobil Corp. buy from hold and ConocoPhillips to hold from sell. Shares of Exxon Mobil rose 1.2% to $72.16. ConocoPhillips dipped 4 cents to $39.40.
Deutsche Bank analyst Paul Sankey said Exxon Mobil has the lowest break-even oil price of its peers. The oil giant is expected to generate cash returns in 2009 around double the industry average and will be the only oil company to continue buying back stock.
Credit default swap prices on Exxon Mobil imply it's less likely to go bust than the U.S. government, he noted.
On ConocoPhillips, Deutsche Bank said its upgrade was based on valuation after the stock hit its $40 price target.
Among energy stocks in the spotlight, CNOOC Limited rose 4% to $89.46. The Chinese oil giant said its first appraisal well under a partnership with Husky Oil China Limited, a subsidiary of Husky Energy Inc., produced fossil fuels.
The well, Liwan 3-1-2, is located about 350 kilometers south east of Hong Kong. The drilling activities commenced in November 2008.
Test results of the well showed flow at equipment restricted rate of up to 53 million cubic feet of gas per day, "providing further evidence of Liwan 3-1 as a major gas discovery deep water offshore China," the company said. CNOOC expects production of 150 million cubic feet per day.
