After the peak: Stocks after $135 oil

After the peak: Stocks after $135 oil

Wednesday, June 04, 2008
Since hitting a high of $135 (U.S.) a barrel on May 22, crude oil has slipped 8.5 per cent amid fretting about whether oil is a speculative bubble and whether U.S. consumption is about to slip. Curiously, though, energy-related equities have fared far better, though they have by no means traded as a homogeneous bloc.

The S[amp]amp;P/TSX energy index has fallen 3 per cent since oil hit its high, outperforming the underlying commodity by 5 percentage points. The S[amp]amp;P 500 energy index has fallen 4.1 per cent over the same period.

Part of the reason, for sure, is the fact that both energy indexes contain more than just oil producers. Any company engaged in natural gas exploration or development has performed relatively well, given that natural gas prices continue to rise, even as oil tumbles: gas prices are up 5.3 per cent since oil hit its May peak.

Within the S[amp]amp;P/TSX energy index, ShawCor Ltd., an energy services company, has performed the best, rising 10.5 per cent. TriCan Well Service Ltd. is up 8.4 per cent and Flint Energy Services Ltd. is up 8.1 per cent.

At the other end of the performance spectrum, Petrobank Energy [amp]amp; Resources Ltd., which had enjoyed a stunning rise of more than 100 per cent over the past 12 months, has fallen the most. It is down 10.5 per cent. Denison Mines Corp., a uranium producer, has fallen 9.1 per cent. InterOil Corp. has fallen 8.9 per cent, Suncor Energy Inc. has fallen 7.7 per cent and Connacher Oil [amp]amp; Gas Ltd. has fallen 7.6 per cent and Canadian Oil Sands Trust is down 7.5 per cent.

Meanwhile, many of the other more established names in the industry inhabit the middle ground in term of their performance. Nexen Inc. is down 4 per cent, Imperial Oil Ltd. is down 4.3 per cent, EnCana Corp. is down 4.4 per cent, Petro-Canada is down 5.3 per cent and Canadian Natural Resources Ltd. is down 6.2 per cent.
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