Energy Roundup: Oil Prices Gain
Oil Prices Top $83, Sunny Day for Solar Shares, GE Building a Plant in Vietnam
September 28, 2007: 01:09 PM EST
NEW YORK (Associated Press) - The following is a summary of top stories in the energy sector at midday Friday.
Oil Heads for Record Territory Again
Oil futures climbed past $83 a barrel, as the steadily weakening dollar continued to draw buyers into commodity markets.
Oil and other commodities denominated in dollars are actually falling in price in the eyes of foreign investors. That's because the dollar has been sliding against other currencies since the Federal Reserve cut interest rates last week. The dollar fell further on Friday on expectations another rate cut is in the offing.
Light, sweet crude for November delivery fell 17 cents to $82.71 a barrel in midday trading on the Nymex after hitting an intraday high of $83.76. Gasoline lost 3.34 cents to $2.0605 a gallon. Heating oil fell 0.96 cent to $2.2425 a gallon. Natural gas for November gave up one cent at $6.909 per 1,000 cubic feet.
The average national price of a gallon of gas fell 0.6 cent overnight to $2.805 a gallon, according to AAA and the Oil Price Information Service. Analysts have been predicting gas prices will add 10 to 15 cents a gallon to catch up to the increase in oil prices, but so far the increases have been slight.
Solar Shares Shine
Shares of solar power companies First Solar Inc. and SunPower Corp. rose after a Banc of America analyst said those "high quality companies" should stay atop the sector.
Solar stocks have been strong this year, with First Solar shares quadrupling in value and SunPower shares more than doubling. Analyst Eric Brown said high expectations for solar companies are now included in the stock prices. Investors should favor First Solar and SunPower because they have the best technology, execution and management, Brown said.
Brown raised his price target on SunPower to $90 per share from $80 _ shares closed at $80.81 Thursday _ and increased his 2008 earnings estimate on First Solar while keeping a $140 price target. First Solar shares ended Thursday trading at $110.03.
Jefferies Downgrades Spectra Energy
A Jefferies & Co. analyst downgraded natural gas infrastructure provider Spectra Energy Corp., saying sinking gasoline prices leave the company little room for growth.
Paul Fremont lowered his rating on Spectra to "Hold" from "Buy," and trimmed his price target to $26 per share from $27.50. Falling gas prices and the struggling credit market will limit the stock prices of pipeline companies, he said.
Fremont believes Spectra is now fairly priced _ shares closed Thursday at $24.93 _ but added that he could lower his target to $24 if the price of oil falls to $60 per barrel. Crude oil recently topped $83 per barrel.
He maintained his earnings estimates for 2007 through 2009, which are slightly above the average estimates of analysts polled by Thomson Financial.
Deutsche Bank: Venezuela Comes To Canada
Deutsche Bank North America analyst Paul Sankey pulled no punches as he cut his price targets on Suncor and Petro-Canada _ major players in developing Canada's oil sands _ after a government report suggested the province of Alberta get a bigger share of oil sands royalties.
"Our first reaction to the Alberta government's recent royalty review panel report was that it was authored by a visiting delegation of Venezuelans. Entitled 'Our Fair Share' it squarely recommends higher tax to compensate the Albertan in the street more for self-perceived under-taxation," Sankey wrote in a note to investors.
"Suncor ... and Petro-Canada, will see 2008/09 earnings reduced 9 percent and 2 percent, respectively _ and long term value reduced by up to -10 percent at least, depending on oil prices," he said. "This is a negative for Canadian oil sands plays and a key risk."
Kinder Morgan Buying Marine Terminals
Pipeline and rail terminal operator Kinder Morgan Energy Partners LP bought the assets of Marine Terminals Inc. for about $100 million.
Kinder Morgan said Marine Terminals mostly handles and stores steel and alloys at facilities in Blytheville, Ark., Decatur, Ala., Hertford, N.C., and Berkley, S.C. The facilities handled about 13.4 million tons of steel products last year, Kinder Morgan said.
GE Will Build Plant in Vietnam
General Electric Co. will invest about $50 million to build its first manufacturing facility in Vietnam.
The new factory, which will be located near the port city of Hai Phong, will produce components for GE power generation equipment. The components produced in Vietnam will be sent to the company's manufacturing and service facilities around the globe for use in finished products.
Construction is to begin by the end of this year with the facility operational by the end of 2009. When fully ramped up, the facility is expected to employ more than 400 people.
--Compiled by AP Business Writer Greg Stec. Questions or comments can be directed to gstec@ap.org.
http://money.cnn.com/news/newsfeeds/articles/apwire/D8RUJBL01.htm
