NEW YORK (MarketWatch) - Energy shares fell Tuesday to finish out a losing month as a downgrade of refiners by Goldman Sachs and lower oil prices weighed on the sector.
XOI 905.60, -19.57, -2.11%
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A flurry of activity including a deal with Exco Resources (XCO 12.71, +1.59, +14.30%) lifted energy shares earlier in the session, before the sector moved down on retreating energy prices and lower consumer confidence data.
A historic oil auction in Iraq - the first since Saddam Hussein kicked out the Western oil majors in the early 1970s - failed to provide much of a lift.
Crude prices fell $1.99 to $69.50 a barrel. See full story. Despite the weakness on Tuesday, crude prices saw their steepest quarterly gain since Hussein invaded Kuwait in the third quarter of 1990.
Against this backdrop, the NYSE Oil Index (XOI 905.60, -19.57, -2.11%) fell 1.9% to 908. The index of major oil producers and refiners has fallen about 8% in June, but it's well above the level of 851 at the start of the second quarter.
Oil refiners fell after Goldman Sachs downgraded Sunoco (SUN 22.63, -0.66, -2.83%) and Tesoro (TSO 12.38, -0.50, -3.88%) to sell from neutral. Sunoco fell 2% to $22.80. Tesoro dropped 2.7% to $12.53.
The NYSE Arca Natural Gas Index (XNG 408.39, -6.43, -1.55%) fell 1% to 411 on Tuesday. The gauge of major gas producers has lost 6% in June.
The Philadelphia Oil Service Index (OSX 158.20, -3.85, -2.38%) dropped 1.6% to 159. The index of oil drillers has fallen 9.6% for the month.
Exco's shares jumped 14% to $12.69 after U.K.-based BG Group said it would pay a total of about $1.3 billion to explore development of shale-gas fields in Texas and Louisiana. See full story.
Meanwhile, ConocoPhillips (COP 41.51, -0.70, -1.66%) spokeswoman Janet Grothe said the oil major continues to negotiate for the Bai Hassan oil field during Iraq's energy auctions. Shares of the oil major fell 1.5% to $41.59.
She declined to comment further pending a possible resolution of the talks. A ConocoPhillips-led consortium was the sole bidder for the oil field in northern Kirkuk province, the Oil Ministry said, according to reports.
Bai Hassan is one of several historic auctions being held in Iraq this week as western oil companies play a leading role in tapping into the country's vast energy resources.
