Energy Stocks

Energy stocks moved higher today as Tropical Storm Gustav slowly moved toward oil-and-gas production facilities in the Gulf of Mexico. Financial stocks rallied, too, and stocks overall ended the day with modest gains.

The Dow Jones industrials, once up as much as 141 points, closed with a 90-point gain, or 0.8%, at 11,503. The Standard & Poor's 500 Index gained 10 points, 0.8%, to 1,282. And the Nasdaq Composite Index finished up 20 points, 0.9%, to 2,382.

But volume was extremely light because many investors and traders were on vacation. New York Stock Exchange volume was less than 800 million shares; 1.6 billion shares is normal. Nasdaq volume barely hit 1.57 billion shares, well below the 2.2 billion-share average.
Energy was the strongest sector of the market as crude oil rose to $118.15 a barrel, up $1.88 from Tuesday. Most weather forecasts said Gustav would intensify back into a Category 3 hurricane and make landfall Monday along the Gulf Coast of Mississippi or Louisiana.
The Gulf is home to about one-fifth of all U.S. oil production and about 16% of the nation's natural-gas output, and any disruption to operations there would push oil, natural-gas and gasoline prices higher.

The Amex Oil Index ($XOI.X) rose 1.9% to 1,343 today. The Amex Natural Gas Index ($XNG.X) was up 1.4% to 617, and the Philadelphia Oil Service Sector Index ($OSX.X) was 1.1% to 303.

Oil refiner Valero (VLO, news, msgs) jumped 4.2% to $35.02. Chevron (CVX, news, msgs) rose 1% to $86.62.

Adding a little buying pressure to energy prices was the weekly supply data from the Energy Department. Oil supplies fell by 100,000 barrels last week; analysts had expected oil supplies to increase by 1 million barrels.

Gasoline supplies fell by 1.2 million barrels, and distillate supplies were unchanged.