US Energy Sector Bathed In Red As Oil Falls Below $50/Bbl

By Steve Gelsi

Energy stocks moved more deeply into the red than the broad market at midday Monday as crude prices fell below $50 a barrel for the first time in two weeks.

With little in the way of company-specific developments, the sector took a hard look at bearishness in the overall economy, led by growing likelihood of a bankruptcy filing from U.S. auto maker General Motors Corp. (GM).

Against this backdrop, the S&P 500 (SPX) fell 3.5% to 787, but losses in the energy patch were worse.

The Amex Oil Index (XOI) lost 4.4% to trade at 844. Hess Corp. (HES) fell 5% to $55.42. Valero (VLO) dropped 7% to $17.73.

The Amex Natural Gas Index (XNG) fell 4.2% to 346. Component Ultra Petroleum (UPL) dropped 5% to $36.87. El Paso (EP) dropped 6% to $6.23.

The Philadelphia Oil Service Index (OSXX) retreated 4.6% to 126. Component Rowan Cos. (RDC) fell 7.4% to $12.23.

Crude oil futures fell $2.94 to $49.44 a barrel, correcting after sizable run-ups in recent weeks.

On the economic front, the big monthly U.S. employment update is slated for Friday. Overseas, Japan's industrial production fell 9.4% in February.

Among energy stocks in the spotlight, Sinopec (SNP) said Sunday its fourth-quarter profit dropped 47% to 29.77 billion yuan ($4.36 billion), although the result was better than the CNY23.53 billion expected in a Thomson Reuters poll cited by Dow Jones Newswires. Shares fell nearly 6% to $59.73.

Oil and gas company Range Resources Corp. (RRC) fell 4.7% to $40.70. The company said Monday that its 26 lenders have recently reaffirmed its $1.5 billion borrowing base. The firm said there was no change in interest rates, fees or repayment terms

In Friday's action, the Amex Oil Index (XOI) lost 3% to end at 883, and the Amex Natural Gas Index (XNG) slipped 3.9% to close at 361. The Philadelphia Oil Service Index (OSXX) retreated 4% to 132.

-Steve Gelsi; 415-439-6400; [e-mail]