Energy stocks fall ahead of U.S. petroleum inventories data
By Steve Gelsi, MarketWatch
NEW YORK (MarketWatch) -- Energy stocks fell Wednesday ahead of key weekly inventories data from the Energy Information Administration, while Wall Street also cast an eye on dimmer prospects for land drilling giant Nabors Industries and for the refining sector.
The Philadelphia Oil Service Index (OSX 167.02, -2.40, -1.42%) led losses among the three major indexes in the energy sector, down 2.1% to 166.
The NYSE Arca Oil Index (XOI 938.50, -5.11, -0.54%) dropped 1.1% to 934, with the NYSE Arca Natural Gas Index (XNG 434.85, -1.13, -0.26%) also down, off 1% to 432.
In energy trading, crude-oil futures fell $1.66 to $63.95 a barrel. See Futures Movers.
A conspiculous early loser, shares of Nabors Industries Ltd. (NBR 16.36, -0.80, -4.66%) fell 5.3% to $16.25.
Jesup & Lamont analyst Lewis Kreps cut his rating on Nabors Industries to sell from hold and set a target price of $13 after the company reported a second-quarter loss. See full story.
"We believe it may be some time before the natural gas situation is resolved and even Nabors' management doesn't seem to have visibility beyond the current quarter," Kreps said in a note to clients. He also cited near-term uncertainty in the commodities market as a factor.
Kreps lowered his earnings targets on the oil-service firm, down to $1.20 a share from $1.42 a share previously for 2009, and to 65 cents a share from $1.10 a share for 2010.
Meanwhile, analyst Jacques Rousseau of Back Bay Research lowered his 2009 and 2010 earnings targets for oil refiners. He cited narrow crude oil differentials, which Valero Energy (VLO 17.77, -0.16, -0.89%) blamed in issuing its recent warning.
"This negative trend has continued into the third quarter and coupled with slack gasoline demand and high distillate inventories, makes it unlikely that there will be much improvement to refining sector fundamentals over the remainder of the year," Rousseau said.
"Although we believe much of this earnings weakness is already priced into the stocks, we do not foresee a significant sector catalyst in 2009 absent a hurricane-related supply disruption," he told clients.
