Energy sector eyes crude record, Petrobras find

SteveGelsi

NEW YORK (MarketWatch) -- A fresh crude-oil record near $114 a barrel, supply jitters from Russia and discussion over a Petrobras discovery shaped the landscape for energy stocks on Tuesday as shares of natural gas stocks led in gains across the sector.

U.S.-listed shares of Petrobras
PBR, -0.13%
rose 92 cents to $123.10. The Brazilian state-run oil company cautioned that further exploration is needed to assess the size of its Carioca field, near the Tupi field discovery announced last year.

"Just like oil sands, there's a long-lead time involved with turning a deepwater discovery into production," said Evan Smith, co-manager of the Global Resources Fund. "The uniting factor of them both is that, that's where the incremental oil finds are coming from."

The comments from Brazil tempered a statement from Haroldo Lima, the head of the country's National Petroleum Agency. He said the field could contain 33 billion barrels of oil equivalent, making it the largest discovered in the last 30 years, according to news service reports. See full story.

Among the group, Spain's Repsol made the biggest move, its shares giving back 6% to $40.95 after enjoying a 17% rally in Monday's session. Touching off the rally was a report that China National Petroleum Corp has "expressed interest" in Repsol's business in Argentina.

Meanwhile, reports that Russia's oil output dipped for the first time in a decade sent crude-oil futures rallying to a new record close of $113.79 a barrel, up $2.03. See Futures Movers.

Another standout was XTO Energy
XTO, +0.20%
shares of which rose 0.9% to $65.29.

The company agreed to pay $600 million for Linn Energy's interests in oil and gas properties in Pennsylvania and West Virginia. Linn said it would use proceeds to reduce debt under its credit facility after the deal closes as planned on July 1.

"This acquisition provides XTO an ideal opportunity to stake a foothold in the emerging Marcellus Shale play of the Appalachian region," said Bob Simpson, chairman and chief executive of XTO Energy. Upon closing, the acquisition will add 25 million net cubic feet of natural gas equivalent per day to XTO's production base.

Also Tuesday, a U.K. newspaper report said China has purchased about $2 billion worth of shares in BP
BP, +1.57%
equating to roughly a 1% stake in the U.K. oil giant, through a sovereign wealth fund.

"We are aware of the Chinese holding and we welcome all shareholders," a BP spokesperson told the Daily Telegraph. BP's U.S.-listed shares fell 14 cents to $65.47.

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