Shares of natural gas companies on Monday slid along with the broader market and after an analyst downgraded the sector on expectations that drilling activity and selling prices will fall.

On the New York Mercantile Exchange, natural gas edged up 1.5 cents, or 0.3%, to $5.51 per 1,000 cubic feet, off nearly 60%, its summer peak of $13.577.

Crude oil prices took a beating, falling $2.98, or 7.2%, to $37.90, a new low for the year as investors anticipate a corporate earnings season battered by negative results. The price of crude has shed nearly three-quarters its value since its record-high of $147.27 in July 2008.

Raymond James analyst J. Marshall Adkins on Monday said the recent rally in natural gas prices will likely be short lived, adding "this rally provides an attractive selling point for these gassy stocks." Adkins predicts a sharp decline in drilling activity and worsening softness in service pricing through 2010.

Adkins downgraded the sector, including BJ Services ( BJS), Patterson-UTI Energy ( PDC) and Pioneer Drilling ( PDC) to "Underperform" from "Market Perform." Shares of BJ Services fell 73 cents, or 6%, to $11.38. Patterson-UTI shares fell 87 cents, or 7.4%, to $10.88. Shares of Pioneer fell 47 cents, or 7.9%, to $5.50.

Jefferies and Co. analyst Paul Fremont on Monday downgraded the Spectra Energy ( PDC) to "Underperform" from "Hold," due to weakness in oil and natural gas prices. Fremont expects the company to provide a total negative return of 10% or more within the next 12-month period. He noted that his 2009 profit estimate of $1.05 per share for the company is 45 cents below the consensus estimate of $1.50.

Shares of the natural gas transport and storage company slid 63 cents, or 3.8%, to $15.64. The 52-week share price range is between $13.36 and $29.18.

Elsewhere in the sector Hess ( HES - Get Report) shares dropped $3.33, or 6%, to $52.20. Apache ( APA - Get Report) shares fell $4.51, or 5.6%, to $76.11. Shares of Chesapeake Energy ( CHK - Get Report), the nation's largest natural gas producer, sank 55 cents, or 3.3%, to $16.13.

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