You are here
Wall Street bounced back on yesterday from recent heavy losses, but U.S. oil and gas stocks were left behind as sharply lower crude oil and natural gas prices triggered further weakness in the energy sector.
Benchmark U.S. oil and gas futures fell by 14 percent and 8 percent, respectively, amid concern that economic recession will dampen demand for both commodities, Reuters reported.
Energy stocks had already taken a beating last week, along with the general slide in U.S. equity values, as trading resumed after a four-day break following the attacks by hijacked aircraft on the World Trade Center and the Pentagon.
Among the nation's major integrated oil companies, Conoco Inc., which operates more than 250 convenience stores, saw its class B stock fall $2.65 on yesterday to close at $24.65 after warning that third quarter earnings would fall short of market expectations.
Conoco, the No. 4 U.S. oil company, said lower oil and gas prices and higher costs would result in earnings per share of 55 cents to 60 cents, compared with analysts' expectations of 60 to 85 cents, according to research firm Thomson Financial/First Call.
Larry Tedeschi, energy analyst with One Group Mutual Funds, said he was puzzled that Conoco's stock had fallen more heavily than its peers in response to weakening oil and gas prices. "I don't know why anybody should be surprised... Conoco's just the first guy in the confession box," he told Reuters.
Tedeschi said most oil- and gas-related stocks are likely to face further losses in the months ahead, but that he expects integrated oils to perform better than other subsectors. "Exploration and production stocks are not that cheap yet, so I think they have a good bit of downside risk. They really haven't buckled as much as I would have expected," he said.