(Energy winners & loser, BP story, updated for Chevron outlook, market close)

NEW YORK ( TheStreet) -- On the day that the U.S. government released its final report on the BP ( BP) oil spill, all the companies involved in the environmental disaster are among the biggest winners amid a broader energy sector rally.

Crude oil was resurgent on Tuesday, trading above the $91 level for most of the day and settling at $91.18. The energy sector outpaced the equities market gains, with energy stocks rising 1.6%, three times the gain made the broader market indexes.

The Presidential Commission's final report on the oil spill indicated the BP, Halliburton ( HAL) and Transocean ( RIG) were all deserving of blame for the disaster. The report also states that the oil industry and regulatory oversight of the industry are still falling short of the mark, and the report chided the energy lobby, the American Petroleum Institute, in particular.

BP shares were up close to 2% on Tuesday, third-best among oil majors, behind shares of Hess ( HES), up 3.8%, and shares of ConocoPhillips ( COP).

Transocean shares were up by 2%, near the top of the list among drillers, behind Rowan Companies ( RDC).

Anadarko shares were up 3.5% for the best return among independent energy companies.

Blowout preventer manufacturer Cameron International ( CAM) was higher by 6%, as the spill commission said that a redesign of the industry standard blowout preventer might be a required preventative measure to avoid future catastrophic spills-- though it came to no specific conclusions about the blowout preventer in the BP oil spill, saying it was still being analyzed. Cameron has maintained since the oil spill that any redesign of the blowout preventer would be a boon to its business -- the proverbial arms dealer argument in favor of a bullish business outlook during times of war.

If the Presidential Commission report was supposed to send shockwaves through the market, it seemed to have the opposite effect. In truth, it probably had limited effect, as most of its findings and recommendations were well-telegraphed. A slowdown in production from the Gulf of Mexico tied to more stringent regulation could theoretically send the price of crude higher as a check on available supply.

Reuters quoted Paul Sankey, managing director at Deutsche Bank, as saying about the oil spill commission, "We think the level of (U.S. offshore) activity is going to be by definition lower, and that you'll never see the peak from before the accident. The broadness of these recommendations and lack of specifics will delay activity."

For many energy market experts, though, Sankey's conclusion seemed like a given well before the final oil spill report was published on Tuesday.

There was also continued uncertainty on Tuesday about when the Trans Alaska Pipeline would be re-started, which was shut down over the weekend after a leak was discovered. The Trans Alaska pipeline supplies 12% of U.S. crude oil production. By the end of the day, there were anonymous reports that a bypass of the leak would lead to the pipeline being reactivated before the end of the week.

Severe winter weather in the northeast was also seen providing a boost to the energy markets. The bullish day for energy stocks on Tuesday can be attributed to a shift in sentiment after the recent selloff in the sector, too.

In truth, energy trading has been schizophrenic over the past week. Last week, when commodities tumbled to begin the new year, led by gold, the entire energy sector was caught up in the commodities freefall.

Energy stocks had hit 52-week highs to end 2010. The rally included integrated oil majors like BP, ExxonMobil ( XOM), ConocoPhillips ( COP) and Chevron ( BP).

After the market close on Tuesday, Chevron announced that it expects earnings for the fourth quarter of 2010 to be higher than in the third quarter 2010. "Upstream results are projected to improve between sequential quarters, benefiting from higher crude oil prices and increased liquids liftings. Downstream earnings in the fourth quarter are also expected to be higher, reflecting a gain on an asset sale," the Chevron announcement said -- though it also noted that refining margins declined globally, save for in the Gulf of Mexico operations.

The year-end rally also included the oil services stocks, like Halliburton, Baker Hughes ( BHI) and Schlumberger ( SLB).

Baker Hughes, Halliburton, Schlumberger and Weatherford International ( WFT) were all up roughly 3%.

Among independents, Anadarko Petroleum ( APC), 25% minority owner of the BP Macondo well, finished the year trading at a share price higher than its pre-oil spill price.

Yet all of those energy sector gains hit a brick wall of investor pessimism last Thursday and Friday, when the entire sector went into a trading tailspin tied to the commodities bearishness. The negative trading sentiment also seemed linked to a disconnect between the price of crude and the larger global economic recovery. If crude really was positioned to surpass $100 in 2011, that could mean much higher costs at the pump, and as a result, this could mean a global economic recovery that stalls as a result of rising energy costs.

The bullish trading on Tuesday shows the $100+ crude oil argument as a glass-half-full trading trigger, as opposed to last week's trigger to sell. It's also tied to a short-term set of conditions -- from the pipeline shutdown to the improving sentiment about Europe that can still change on any given day -- meaning that a sustained rally for energy stocks from these levels is still a point for debate.

One day of trading doesn't put to rest the fears of a larger correction in the energy sector, and analysts were saying last week after the selloff that as crude oil neared $100, a correction of 5% to 8% would not be uncommon for the sector. In fact, history shows that whenever the price of oil reaches a psychological threshold, the markets will sell off on fears that the global economic engine can't be sustained. In effect, the resurgence of the energy bulls on Tuesday was a catch-up trade after last week's pessimism took stocks down from their just-attained 52-week high levels. It's back to square one for the new year in energy trading.

John Tasdemir, analyst at Canaccord Genuity, said that when energy hit a snag last week it was no surprise, as energy had had such a strong run through the fall that it was due for an air pocket. "Given we had such a great run, I don't think a selloff was unexpected, even as the fundamentals within the energy sector shift to the more positive side," Tasdemir said.

Yet bullishness predicated on oil moving onwards and upwards above $100 for crude oil is not an event that Tasdemir and analyst Phil Weiss of Argus Research are willing to support as a fait accompli. It's not a secular negative trend for oil, but a negative commodity trade that still could claw its way back into the market activity over the next few weeks, coupled with a conservative view of the global economic outlook that can still trip energy stocks up.

"Another 5% to 8% correction is not unusual at all in this space," Tasdemir said, however the analyst added, "This group is still going to be among the outperformers in 2011. I don't see a cyclical downturn."

Argus Research analyst Phil Weiss said that his biggest concern remains crude oil rising too fast and causing the economy to tank. Those feelings are out there and able to change the view on the sector, Weiss said.

Weiss recalled that when he said recently on CNBC that oil would not break $100 in 2011, the reaction was one of laughter and disbelief, and that only reinforced his thinking that all the talk about oil above $100 remains a potential problem. "Long term, the trend in prices is up, but too much at one time is dangerous," the analyst said.

-- Written by Eric Rosenbaum from New York.


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