Energy Sector Roundup: Gas up

Gasoline Tops $3.75 at the Pump

Gasoline pump prices soared above $3.75 a gallon and oil prices fell as an Energy Department report painted a mixed picture of the nation's petroleum reserves.

Light, sweet crude for June delivery fell $1.58 to settle at $124.22 a barrel on the New York Mercantile Exchange.

At the pump, the average national price of a gallon of regular gas rose 2.6 cents overnight to a record $3.758 a gallon, according to AAA and the Oil Price Information Service. Gas prices are 67 cents higher than a year ago, and are expected to continue rising at least until the Memorial Day weekend.

June gasoline futures fell 1.96 cents to settle at $3.1804 a gallon.

In other Nymex trading, heating oil futures fell 8.11 cents to settle at $3.6178 a gallon, and June natural gas futures rose 17.6 cents to settle at $11.598 per 1,000 cubic feet.

EIA Says Gasoline Supplies Fell More Than Expected

In its weekly report, the Energy Department's Energy Information Administration (EIA) said gasoline inventories fell by 1.7 million barrels, or 0.8 percent, to 210.2 million barrels last week -5.9 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.

Analysts expected stockpiles of gasoline to fall by only 800,000 barrels, according to a survey by Platts, the energy research arm of McGraw-Hill Cos.

Crude-oil inventories rose by just 200,000 barrels, or 0.1 percent, to 325.8 million barrels, which were 4.3 percent below year-ago levels. Analysts expected a gain of 2.5 million barrels.

Demand for gasoline over the four weeks ended May 9 was about 0.3 percent lower than a year earlier, averaging nearly 9.3 million barrels a day.

At the same time, U.S. refineries ran at 86.6 percent of total capacity on average, a gain of 1.6 percentage points. Analysts expected capacity to rise by only 0.8 percentage point.

Inventories of distillate fuel, which include diesel and heating oil, rose by 1.4 million barrels to 107.1 million barrels for the week ended May 9. Analysts expected distillate stocks to rise by 1.1 million barrels.

Anadarko Stays With Production Guidance

Independent oil and gas producer Anadarko Petroleum Corp. says it will stick with its production outlook for the year, despite delays in the repair of a natural gas pipeline.

The company still expects to produce 207 million to 212 million barrels of oil equivalent for the year. In 2007, the company reported total sales from retained properties, which excludes sold assets, of 196 million barrels of oil equivalent.

Anadarko Petroleum said the Independence Trail pipeline, which transports natural gas from the company-operated Independence Hub processing platform in the Gulf of Mexico, is now expected to be operational in the first half of June. The pipeline was originally expected to start up in mid-May after a leak shut it down early last month.

Argentina Labor Problems Hit Allis-Chalmers

Wachovia Capital Markets analyst Tom Curran says Allis-Chalmers Energy's drilling and completion operations in Argentina are being impacted by a labor dispute between labor unions and oil companies.

"Our source said that, thus far, the strike has prevented Allis-Chalmers from driving to certain locations and delivering equipment, but did not quantify how many or to what degree rigs may be affected," Curran said. "Allis-Chalmers does have some standby agreements in place, yet historically these havent resulted in significant, timely recoveries."

Last week the oil and gas services company reported first-quarter earnings above Wall Street's forecast. But Curran says the Argentina strike, which began April 30 and reduced output from 6,000 fields, could hurt the company's profit.

"It's one of the main reasons we're at 28 cents (per share) for Q2 2008E versus guidance of 29 cents to 32 cents and current consensus of 30 cents," he said.

More Trouble in Nigeria

Gunmen in southern Nigeria hijacked an oil-services vessel carrying 11 crew members, according to a military spokesman.

They want about $250,000 for the release of the boat and the crew, including one Portuguese and one Ukrainian, said military spokesman Maj. Sagir Musa.

The boat, used for maintaining oil infrastructure in Africa's biggest petroleum producing country, was taken in the southern Niger Delta.

Numerous armed militant and criminal groups roam the delta, a vast region of creeks, swamps and rivers but few roads. Militants frequently blow up oil infrastructure or attack security forces to press demands for more oil-industry revenue for their impoverished region.

More than 150 foreigners were kidnapped for ransom in the region in 2007. The hostages are normally released unharmed after payment is delivered, although several have been killed or injured during botched seizures or rescue attempts.

Nigeria supplies about a million barrels of oil a day to the U.S., according to the Energy Department.

Solar Shares Shine Again

Investors warmed to shares of solar energy products makers again as a Jefferies & Co. analyst upgraded shares of a solar wafer maker and another praised the sector's strong fundamentals.

Analyst Paul Clegg raised Evergreen Solar Inc. to "Buy" from "Hold" in a note to investors, saying the stock's recent price decline makes it an attractive buy.

Evergreen shares rose $1.16, or 13.7 percent, to $9.60 in afternoon trading.

Citi Investment Research analyst Jim Liang told clients "solar fundamentals are currently very strong, with the rising tide lifting all boats, driven by generous feed-in tariffs on the demand side and tight poly(silicon) on the supply side."

Polysilicon is a key component in solar cells.

Liang singled out Suntech Power Holdings Co. Ltd. as a favorite because weakening prices in the second half of the year could shake out the industry and leave Suntech in a stronger relative position.

Suntech rose $3.84, or 8.6 percent, to $48.63.

Elsewhere in the sector, shares of SunPower Corp. gained $6.80, or 7.6 percent, to $95.86, and First Solar Inc. rose $11.44, or 3.8 percent, to $315.51 Earlier, First Solar shares hit a new high of $317.

JA Solar Holdings Co. Ltd. added $1.71, or 7.2 percent, to $25.41, and Akeena Solar Inc. rose 53 cents, or 9.8 percent, to $5.83.

--Compiled by AP Business Writer Greg Stec. Questions or comments can be directed to gstec@ap.org.