NEW YORK (MarketWatch) - Energy stocks drew strength from the broad market to start the second half of 2009 with modest gains ahead of weekly petroleum supply inventories from the Energy Information Administration on Wednesday.
XOI 936.16, +17.87, +1.95%
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Rising oil futures also provided a boost to energy stocks on the heels of an unexpected drop in petroleum inventories in a fresh survey by the American Petroleum Institute.
Against this backdrop, the NYSE Arca Oil Index (XOI 936.16, +17.87, +1.95%) rose 1.6% to 933. The NYSE Arca Natural Gas Index (XNG 421.39, +7.74, +1.87%) rose 1.9% to 421. The Philadelphia Oil Service Index (OSX 162.88, +3.22, +2.02%) advanced 1.3% to 162.
Among stocks in the spotlight, the Obama administration late Tuesday extended favorable trade terms to Ecuador despite a plea from Chevron (CVX 67.74, +1.49, +2.25%) . Shares of Chevron rose 1.5% to $67.28.
Ecuador will continue to receive duty-free treatment and other preferential treatment under the Andean Trade Preference Act, according to a release from the U.S. Trade Representatives Office. Chevron is fighting a class action environmental lawsuit in Ecuador.
In a sign of potential deal making on the horizon in the energy sector, Bank of America Merrill Lynch named Alan Murray as managing director of Energy Corporate & Investment Banking.
Murray was formerly global head of Energy M&A at Citigroup.
Oil companies mostly walked away from the steep terms offered in Iraq's historic auction for oil and gas development leases. The cabinet is reviewing new bids from energy firms, according to reports on Wednesday.
Oil shares underperform S&P 500.
The NYSE Arca Oil Index (XOI 936.16, +17.87, +1.95%) finished out the first half of 2009 with a loss of 6%.
The gauge of major oil producers and refiners vastly underperformed the 7% gain from the S&P 500 (SPX 931.29, +11.73, +1.28%) in the first half. While the NYSE Arca Oil Index managed to push into the plus column during the first six months of trade, it weakened as doubt about an economic revival took hold.
Meanwhile, refiners felt the squeeze from a glut in supply as new facilities planned during the boom came on line.
Other industry gauges put in much stronger performances.
The NYSE Arca Natural Gas Index (XNG 421.39, +7.74, +1.87%) rang up a gain of about 10% in the first half.
The Philadelphia Oil Service Index (SOX 268.03, +4.90, +1.86%) wrapped up the first half with a big jump of 32%.
Oil prices have gained 57% in the first half of 2009, including a gain of 41% in the second quarter. Natural gas prices have fallen 32% so far this year, but rose 1.6% in the second quarter.
European green energy stocks struggle
While the U.S. government has made headlines with pledges to get the country green and invest in renewable energy sources, shares of related companies in Europe remain a tough call for investors.
Europe houses many big alternative energy providers in the key solar and wind space, such as Germany's SolarWorld and Copenhagen-based Vestas Wind Systems.
Societe Generale's European Renewable Energy Index, which tracks the performance of the largest stocks in the renewable space, is up 8% year-to-date, but lost 60% in 2008.
Many shares in the space are coming off big losses.
Shares of SolarWorld are up 13% year-to-date, Vestas is up 26%, and Spanish wind giant Iberdrola Renovables is up 6%, but another big German solar player, Q-Cells, is down more than 40%. See
