(By Mayur Pahilajani - iStockAnalyst Writer)Energy stocks rebounded and are looking strong. Falling crude prices had pulled down the shares of major energy producers in the market during recent sessions. Till yesterday, crude oil prices retreated to nearly a five-month low and it has been down over 30 percent from its record level in the month of July.
On Wednesday, oil companies' stocks gained upward momentum, following the U.S. Energy Department's report showing decline in inventory in its weekly report. The department showed that oil stockpiles dropped by 5.9 million barrels and gasoline supplies decreased by 6.5 million barrels for the week ended September 5.
Motor gasoline supplies have moved down for the seventh week consecutively, amid disruption of supplies due to Hurricane Gustav. The U.S. gulf holds around 4,000 offshore oil and gas platforms, of which as many as 100 of them were severely damaged in 2005 by Katrina and Rita.
With Ike still active with low intensity, the investors do not see major disruption of oil facilities in the gulf. The U.S. National Hurricane Center downgraded Hurricane Ike from a Category 3 storm to a Category 1, after it bore on eastern Cuba on Sunday. Its winds were travel at almost 80 miles (130 kilometers) per hour.
OPEC's late night decision to end oil overproduction and to slash more output triggered the rally in oil prices. During the 149th meeting in Vienna, the Organization of Petroleum Exporting Countries oil group announced a cut of 520,000 barrels per day to its output on Wednesday, citing potential risk to oil markets if the rates moved below $100 a barrel.
The group said the market is "over-supplied" and that the countries have been pumping more than their 28.8 million-barrel limit, excluding Indonesia. Meanwhile, the International Energy Agency has slashed its estimates of 2008 and 2009 global oil demand.
Among energy producers, shares of the Amex Oil Index (NYSE: XOI) traded up from the 52-week low, by 0.92 percent or $10.53 to $1,152.54 today, after falling more than 6 percent on Tuesday to close at a new low of $1,142 for this year. While the Amex Natural Gas Index (NYSE: XNG) was trading up by 2.3 percent or $11.56 at $523.20 on Wednesday.
The Philadelphia Oil Service Index (NYSE: $OSX) also surged by 2.6 percent to $251 during early trading and was recently moving slightly down by 0.03 percent to $244.67 at 11.33 a.m. ET.
Chevron Corp. (NYSE: CVX) was moving up by 2.42 percent or $1.91 to $80.70 at 11.41 a.m. ET, after closing at $78.79. Most of the companies in the sector lost as much as 10 percent, following 15 percent of drop over the last few weeks as the prices neared $100 for the first time since April.
Exxon Mobil Corp. (XOM) stayed up after the bell, rising up by 1.69 percent or $1.24 to $74.50 at 11.51 a.m. ET. on Wednesday, following its fall to 52-week low of $73.26 yesterday.
While, shares of SemGroup Energy Partners (NASDAQ:SGLP), previously owned by a privately held SemGroup L.P., was declining by 2.26 percent or 21 cents to 9.0899, from its last closing at 9.30. SemGroup L.P. had filed a Chapter 11 but the firm's creditors suggest that it has been raising capital, which could be paid to them.
During early morning trading, oil futures for October delivery climbed as much as $1.41, or 1.4 percent, to $104.67 a barrel on the New York Mercantile Exchange. The contract had dropped by as much as $3.08 overnight to settle at $103.26, which is the lowest close since April 1.
The contract had settled at $103.83 a barrel in New York On April 3, while on July 11, oil hit a record high price of $147.27 a barrel. The market analysts are speculating that gasoline demand in the United States have dropped on higher prices, prompting consumers across the country to cut down on fuel usage.
Brent North Sea crude for October delivery also climbed by $1.40 or 1.4 percent to $101.74 a barrel in London's ICE futures exchange.
