MW: Energy stocks lose ground ahead of inventories update
NEW YORK (MarketWatch) -- Energy stocks fell Wednesday ahead of weekly data on U.S. petroleum inventories as crude-oil futures retreated back under $70 a barrel.
The NYSE Arca Oil Index (XOI 921.59, -26.94, -2.84%) fell 1.6% to 933, pulled down by a 5% drop in shares of component Hess Corp. (HES 54.08, -3.63, -6.29%) .
The NYSE Arca Natural Gas Index (XNG 430.24, -13.06, -2.95%) also fell, down 1.6% to 436. Component El Paso Corp. (EP 9.14, -0.43, -4.45%) dropped 4% to $9.16.
The Philadelphia Oil Service Index (OSX 165.88, -6.53, -3.78%) fared worse, down 2.4% to 168.
Energy prices played a role in the latest consumer price index, with rising gasoline prices helping to nudge up retail-level inflation by 0.1% in May. See Economic Report.
At last check, gasoline rose to an average U.S. price of $2.68 a gallon on Wednesday, up a penny, according to the AAA Daily Fuel Gauge Report.
In the energy pits at the New York Mercantile Exchange, crude futures fell 56 cents to $69.91. See full story.
Among energy stocks in the spotlight, Royal Dutch Shell (RDS .A 50.84, -0.77, -1.49%) fell 1.4% to $50.90. The company said it would continue to be unable to fulfill delivery contracts at its 300,000-barrel-a-day Forcados facility in Nigeria.
Also in the energy patch, TransCanada (TRP 27.39, -1.83, -6.26%) will issue $1.6 billion of stock. The Calgary pipeline giant will pay ConocoPhillips (COP 42.06, -1.21, -2.80%) $550 million plus assume $200 million debt to take sole ownership of the Keystone Pipeline System.
Shares of TransCanada subtracted 6.6% to $27.29.
Whiting Petroleum Corp. (WLL 37.15, -3.77, -9.21%) saw its shares fall 8.8% to $37.30. The company launched an offering of 3 million shares of convertible perpetual preferred stock to raise gross $300 million to pay down debt.
Analysts at Houston-based energy research firm Tudor Pickering Holt said in a note to clients on Wednesday that Exelon's (EXC 48.67, -0.26, -0.53%) buyout offer of NRG Energy (NRG 22.70, -0.20, -0.87%) is losing momentum after the electricity generator extended its tender offer deadline to Aug. 21 from July 26.
Analysts said the extension marks a "positive for NRG as we believe Exelon's offer undervalues its target. What is surprising is the significant drop in shares tendered ... was 51% when last announced in February; now only 12%," Tudor Pickering Holt said.
