Energy shares trim losses, fall short of full recovery

By Jasmina Kelemen
MarketWatch
Last Update: 4:53 PM ET Dec 4, 2006

Energy shares trim losses, fall short of full recovery

HOUSTON (MarketWatch) -- Oil and gas shares recovered from intraday lows but were unable to make gains Monday as concerns that supplies were outpacing demand weighed on crude oil and natural gas prices.

The Amex Oil Index (XOI : amex oil index News , chart, profile, more Last: 1,212.72-3.26-0.27% 4:33pm 12/04/2006

XOI 1,212.72, -3.26, -0.3%) was off 0.7% to 1,207.98 points as crude for January delivery lopped off $1.00, or 1.5%, to $62.44 a barrel on the New York Mercantile Exchange. The Amex Natural Gas Index (XNG : amex natural gas index News , chart, profile, more Last: 469.68-1.80-0.38%4:33pm 12/04/2006
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XNG 469.68, -1.80, -0.4%) was off 0.4% as natural gas prices lopped off 7.3% to $7.80 per million British thermal units.

The Philadelphia Oil Service Index ($OSX : phlx euro style oil svc inde osx News , chart, profile, more Last: 210.61-1.28-0.60% 4:03pm 12/04/2006

$OSX210.61, -1.28, -0.6%) fell 0.6% to 210.61 points.

Crude oil futures started the session on a weak note after the president of the Organization of Petroleum Exporting Countries said that supplies continue to outpace demand, despite recent efforts by the oil cartel to cut production. See full story.

Additionally, last week's manufacturing data raised concerns that the economy might be slowing faster than anticipated, which could eventually dampen energy demand, said Phil Flynn, a senior analyst at Alaron Trading.

In the news, a British newspaper over the weekend reported that ExxonMobil Corp.
(XOM : exxon mobil corp com News , chart, profile, more Last: 77.77+0.57+0.74% 4:34pm 12/04/2006
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XOM77.77, +0.57, +0.7%) plans to sell several stakes in oil and gas fields in the southern North Sea, in line with similar moves from other oil majors. See Full Story.

Others such as ConocoPhillips (COP : conocophillips com News , chart, profile, more Last: 67.26-0.12-0.18%
4:34pm 12/04/2006

COP67.26, -0.12, -0.2%) and BP PLC (BP : bp plc sponsored adr News , chart, profile, more Last: 67.56-0.36-0.53%

BP67.56, -0.36, -0.5%) are also selling assets after reviewing their North Sea asset portfolios in light of declining fossil fuel reserves there.

ConocoPhillips is selling its stakes in the North Sea's Alba, Everest and Armada fields, The Sunday Telegraph reported without citing sources

On the oil index, Sunoco Inc. (SUN : sunoco inc com News , chart, profile, more Last: 67.46-1.52-2.20% 4:34pm 12/04/2006

Oil majors fared better, with Chevron Corp. (CVX : chevron corp new com News , chart, profile, more Last: 73.50+0.39+0.53% 4:42pm 12/04/2006
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CVX 73.50, +0.39, +0.5%) rising 0.5% to $73.50 and Exxon Mobil, which was down most of the session, up 0.7% to $77.77.

In broker news, Eagle Rock Energy Partners (EROC : eagle rock energy partners l unit 99/99/9999
News , chart, profile, more Last: 18.98+0.10+0.53% 4:30pm 12/04/2006
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EROC18.98, +0.10, +0.5%) shares climbed 0.5% to $18.98 after several brokers initiated coverage on the company. Raymond James started the Houston-based firm at outperform, while AG Edwards assigned it a buy rating.

The company, which is involved with gathering, processing and transporting natural gas -- also known as mid-stream services, operates throughout Texas and Louisiana.

"The partnership has an impressive management team that has consistently demonstrated the ability to grow the business through a combination of organic growth projects and acquisitions," Raymond James analysts in a note to clients.