Canadian oil stocks tumble in aftermath of Gustav

Tue Sep 2, 2008 5:04pm EDT
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - Canadian energy stocks, including heavyweights Suncor Energy Inc and Imperial Oil Ltd, tumbled with oil and gas prices on Tuesday after initial assessments showed Hurricane Gustav spared major U.S. Gulf production facilities.

The Toronto Stock Exchange's oil and gas group, which includes integrated oil companies, independent producers and oil field service providers, sank 26.05 points, or 6.5 percent, to 375.20.

It was the major factor in a more than 3 percent retreat by the broad S&P/TSX composite index.

The drop came as oil fell 5 percent to $109.71 a barrel, and natural gas futures skidded 8.6 percent to $7.261 per million British thermal units.

Canadian spot natural gas in Alberta sank to an eight-month low, averaging C$6.13 per gigajoule.

Oil could get stuck in the current range, assuming minimal storm damage to Gulf facilities and slack demand for crude amid the weak U.S. economy. Working against that could be a cut in production from OPEC, which meets next week, FirstEnergy Capital Corp analyst Martin King said.

But natural gas prices may be in for a further slide, with inventories climbing quickly after moderate North American weather in the second half of August.

"There's no OPEC to fall back on for this one," King said.   Continued...