energy BLOG

by Jasmina Kelemen (MarketWatch)

Shares of energy companies whittled their gains Wednesday after U.S. supply data revealed a decline in the nation’s crude, gasoline and distillate supplies but failed to advance the commodities market, which was expecting a bigger drawdown in heating-oil supplies.

The Amex Oil Index (XOI : 1,171.11, +6.14, +0.5% ) was up 0.5% to 1,171.02 points as crude for March delivery fell $1.06 to $58. The Amex Natural Gas Index (XNG : 460.01, +1.61, +0.4% ) rose 0.5% to 460.45 points as natural gas dropped 1.7% to $7.15 per million British thermal units.

The Philadelphia Oil Service Index ($OSX : 199.82, -0.14, -0.1% ) fell fractionally to 199.82 points.

The Energy Department said distillate supplies, which include heating oil, fell for a third week, down 3 million barrels to 133.3 million for the week ended Feb. 9. Crude supplies fell by 600,000 barrels to 323.9 million. Motor gasoline stocks fell for the first time in nine weeks, down 2 million barrels to total 225.2 million barrels. See full story.

“The market seems to have been taken aback by the smaller-than-expected draw in distillate inventories, which continue to hold well above the five-year average,” said Raymond James analysts in a note to its clients. On the oil index, Occidental Petroleum Corp. (OXY : 48.10, +1.50, +3.2% ) lead the advance, rising 3.2% to $48.10.

Total (TOT : 70.14, +1.66, +2.4% ) was up 2.4% after reporting a 5% decline in fourth-quarter profit. The French oil major also said it expects production to grow 5% by 2010 and will boost its capital spending. See Full Story.

Exxon Mobil Corp. (XOM : 75.60, +0.15, +0.2% ) was among the index’s largest laggards, rising 0.2% to $75.60.

The world’s largest publicly-traded oil company said phase one of the Sakhalin-1 project offshore eastern Russia has reached its targeted peak production rate of 250,000 barrels of oil per day. The project is being led by Exxon subsidiary Exxon Neftegas Ltd., and includes affiliates of Rosneft RN-Astra and Sakhalinmorneftegas-Shelf, Sakhalin Oil and Gas Development Co. and ONGC Videsh Ltd.

Natural gas production for the peak winter season in 2007 has been 140 million cubic feet per day, Exxon said.

On the oil service index, shares of Transocean Inc. (RIG : 77.08, -0.82, -1.1% ) fell 1.1% to $77.08, despite blowing past analysts’ earnings expectations. See full story.

The Houston-based offshore drilling company reported fourth-quarter net income rose to $621 million, or $2.05 a share, from $152 million, or 45 cents a share, a year earlier. Net income for the three months ended Dec. 31, included after-tax gains of $192 million, or 63 cents a share, mostly from the sale of two rigs. Revenue rose 54% to $1.19 billion from $771 million

A Thomson Financial survey of analysts, on average, estimated earnings of $1.19 a share for the quarter.

As a Valentine’s Day gift for a loved one, a Houston-based analyst recommended presenting a loved one with a mixed box of chocolates and a mixed energy portfolio. Such a portfolio should contain one large cap, 2 mid caps and one small cap from both the exploration and production and oil-service sectors, independent analyst Dan Pickering of Pickering Energy Partners said.

Some of the more endearing names to consider include Devon Energy Corp. (DVN : 67.35, +0.26, +0.4% ) , Southwest Energy Co. (SWN : 38.07, +0.20, +0.5% ) , Ultra Petroleum Corp. (UPL : 51.95, +0.10, +0.2% ) and Arena Resources Inc. (ARD : 43.81, +0.81, +1.9% ) .”Your sweetheart will thank you,” he wrote in a note to clients.