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Energy Contracts End Mixed

Chuck Marvin

Energy futures were mixed Monday, with oil easing while gasoline edged to the upside.

The near-term contract for crude oil finished down 52 cents at $56.59 a barrel at the New York Mercantile Exchange. Reformulated gasoline was 5 cents higher at $1.96 a gallon, and heating oil was unchanged at $1.69 a gallon.

Natural gas slid 7 cents to $6.85 per million British thermal units.

After exhibiting substantial weakness early in the session, advancing gasoline prices re-energized crude oil futures, sending them into positive territory. However, traders exiting their April positions ahead of the contract's expiration Tuesday ultimately sent it lower.

Gasoline futures have climbed from a low of $1.58 a gallon on Jan. 19, driven by high demand ahead of the summer driving season and refinery shortfalls.

"Refineries should be buying crude oil and ramping up gasoline production in this environment," said Max Pyziur, energy analyst for CPM Group in New York. "These large spreads simply don't make sense."

Providing limited support to gas prices was a fire that erupted at BP's (BP Quote) Carson, Calif., refinery on Friday. The fire was reportedly extinguished in six minutes and won't affect the refinery's output.

Meanwhile, the Chinese central bank's overnight increase of its benchmark lending rate was partly responsible for the softness earlier. The Chinese government's effort to gradually slow its economy could result in a decline in global demand for crude oil, according to analysts.

Elsewhere, violence escalated in Nigeria over the weekend when rebel groups abducted three factory workers from the Anambra region. Nigerian troops raided several villages in search of rebels and weapons near the country's main oil distribution center of Port Harcourt.

Among the stocks in the news, Royal Dutch Shell (RDS.A Quote) has begun repairing its breached Nembe Creek pipeline. Security fears were preventing technicians from entering the area since the rupture occurred on March 4.

Generally, energy stocks finished the trading session higher. The iPath Goldman Sachs Crude Oil (OIL Quote) ETF was ahead by 0.7% at $35.56.

ConocoPhillips (COP Quote) climbed 0.47%, Chevron (CVX Quote) advanced 1.9%, and ExxonMobil (XOM Quote) was up 1.8%.

E&P firm Mariner Energy (ME Quote) was upgraded by Calyon Securities to buy from add. Its stock traded 2.7% higher at $17.40.

Kodiak Oil & Gas (KOG Quote) rose 0.8% to $4.89 after it reported a loss of 4 cents a share for 2006.

Hercules Offshore (HERO Quote) announced that it is acquiring the drilling services firm Todco (THE Quote) in a cash and stock deal worth $2.3 billion. Shares of Hercules ware off 4.7% at $25.32, but Todco traded 19.7% higher at $39.24.