Oil Dips Along With Equities

Monday's energy markets chose to ignore bullish news and respond to bearish news, according to Tim Evans, energy analyst at Citigroup Global Markets. Reports that a major oil spill forced Royal Dutch Shell (RDSA Quote) to shut down its 187,000 barrel-per-day Nenbe Creek pipeline in Nigeria should have caused traders to bid up the price of oil, Evans says.

Rebel groups have ratcheted up their activity in the Nigerian delta region in recent months, making it increasingly dangerous for oil companies to operate there. Shell did not say whether the pipeline leak was caused by sabotage, nor did it say when the leak would be repaired.

Instead, commodity traders were perceiving weakness in stock markets as an indicator of a decline in future petroleum demand, Evans says. Prices were also affected by statements made by OPEC oil ministers suggesting that OPEC will not cut production at its next meeting on March 15.

Energy stocks were broadly lower on Monday. The iPath Goldman Sachs Crude Oil (OIL Quote) ETF closed down 2.6% at $36.53.

El Paso(EP Quote) was upgraded by Matrix Research from strong sell to buy. Its stock closed down 1% at $13.84. Last week, Moody's announced that it was assessing the company for possible upgrade after it sold its ANR pipeline for $4 billion.

Chesapeake Utilities(CPK Quote) was upgraded by Robert W. Baird from neutral to outperform. Its stock rose 1.4% toi close at $29.90.