Oil Driller Stocks Tumble as Obama Vows Action
Investors pummeled shares of oil drillers and BP on Tuesday, as President Obama talked tough about dealing with the worst oil spill in the nation's history.
Several analysts added fuel to the sell-off by cutting their outlooks on companies that figure to be hurt by the six-month moratorium on deepwater drilling in the Gulf or the temporary delay in issuing permits for drilling in shallow water.
Goldman Sachs suggested the deepwater moratorium could go for as long as a year.
Special Section: Disaster in the Gulf
Obama told NBC's Matt Lauer in an interview for the "Today" show that he has talked with Gulf fishermen and oil spill experts about the spill.
"I don't sit around just talking to experts because this is a college seminar, we talk to these folks because they potentially have the best answers — so I know whose ass to kick," Obama said.
The comments helped set the stage for a huge sell-off of oil companies and drilling companies with strong ties to the Gulf. Shares of BP, which leased the rig that exploded and sank in April, hit a 15-month low. Shares of Transocean, which owned the rig, hit their lowest level a year and a half.
There was also a report that another rig was leaking oil into the Gulf. Taylor Energy, which owns that rig, said it has been leaking since 2004 when it was hit by Hurricane Ivan and a pipeline broke. Taylor says repair work has been going on ever since and a dispersant ship has been handling the leak.
In afternoon trading BP shares fell $2.22, or 6 percent, to $34.53. Transocean shares dropped $3.41, or 6.9 percent, to $45.76. Halliburton lost 28 cents at $22.50. Cameron International rose 34 cents to $33.29.
Drillers such as Baker Hughes, Diamond Offshore Drilling, Atwood Oceanics and Noble also fell after being hit by analyst downgrades. Baker Hughes lost 76 cents, or 2 percent, at $37.31. Diamond offshore dropped $3.77, or 6.4 percent, to $55.44. Atwood gave up $2.01, or 7.7 percent, at $24. Noble fell $1.02, or 3.7 percent, to $26.70.
Several analysts added fuel to the sell-off by cutting their outlooks on companies that figure to be hurt by the six-month moratorium on deepwater drilling in the Gulf or the temporary delay in issuing permits for drilling in shallow water.
Goldman Sachs suggested the deepwater moratorium could go for as long as a year.
Oil prices themselves moved higher Tuesday as traders tried to get a handle on whether weak, short-term demand for crude could eventually push prices down. Drivers found gasoline pump prices sliding still lower after a month of declines.
Benchmark crude for July delivery rose 55 cents to settle at $71.99 a barrel on the New York Mercantile Exchange.
"It's kind of real mess in the oil market because it doesn't know what it wants to follow," PFGBest analyst Phil Flynn said.
Analysts are worried about forecasts for hurricane season, which started last week, that they fear could — along with the drilling moratorium — disrupt production of oil and natural gas in the Gulf and send oil prices higher this summer.