Investors Pull Back on Energy
Energy stocks took another sharp hit Tuesday, extending their decline since the fourth quarter began, as oil prices fell and as a huge block of Exxon Mobil Corp. shares changed hands.
Oil and natural gas stocks have led the market for much of this year, but some traders and investors have been fleeing the sector during the last two weeks.
The so-called XOI index of 13 major energy issues, including Exxon Mobil, slumped 4.1% on Tuesday, the biggest one-day loss this year. It has plunged 13.7% since reaching a record high Sept. 29, but still is up 30.5% year to date.
Analysts say the stocks’ recent losses reflect profit taking after the sector’s gains this year and concerns that oil and natural gas prices will decline in 2006 from recent record highs.
Near-term oil futures in New York peaked at $69.81 a barrel on Aug. 30, after Hurricane Katrina wreaked havoc with Gulf Coast oil and gas facilities. The price has pulled back since amid signs that Americans are cutting back on gasoline use.
Oil futures dropped $1.16 to $63.20 a barrel in New York on Tuesday on forecasts showing that Hurricane Wilma will miss storm-battered production platforms off the Louisiana and Texas coasts.
Unleaded gasoline futures fell to a three-month low, down 8 cents to $1.735 a gallon.
Energy stocks were mostly drifting lower Tuesday when a block of 24.5 million Exxon Mobil shares traded on the New York Stock Exchange at midday. The block traded at $57 a share, which was 95 cents below the previous trade price.
The trade spooked investors because the steep discount to what was then the market price suggested the seller was anxious to get out, some analysts said.
“A large block like that is going to put it in the spotlight and put a little downward pressure on the market,” said Evan Olsen, head trader at brokerage Stephens Inc. in Little Rock, Ark.
Goldman, Sachs & Co. executed the transaction, according to traders told about the deal. A Goldman spokesman did not return a call seeking comment. An Exxon Mobil spokesman declined to comment.
Exxon Mobil ended the day at $56.30, down $2.56. Other stocks down sharply included Chevron Corp., off $2.66 to $57.29; Marathon Oil Corp., down $2.57 to $58.87; and Kerr-McGee Corp., down $3.83 to $82.23.
