September 2, 2008 / 9:02 PM / 10 years ago

UPDATE 1-Canadian oil stocks tumble in aftermath of Gustav

(Adds details, updates prices)

By Jeffrey Jones

CALGARY, Alberta, Sept 2 (Reuters) - Canadian energy stocks, including heavyweights Suncor Energy Inc (SU.TO) and Imperial Oil Ltd (IMO.TO), 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 .SPTTEN, 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 .GSPTSE.

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.

“It’s tough to find any bullish factors for gas right now.”

Oil and gas producers said remote sensors indicated major platforms in the Gulf of Mexico did not move from where they were moored before the storm roared through. The U.S. Coast Guard said it saw no signs of major damage during post-hurricane flyovers.

However, Royal Dutch Shell (RDSa.L), the region’s largest producer, said it could take three to five days before it restores output.

Full resumption of output in the region — where 25 percent of U.S. oil and 15 percent of the country’s natural gas is produced — could take a couple of weeks, according to U.S. Interior Secretary Dirk Kempthorne.

The industry shut down all the region’s daily production of 1.3 million barrels of oil and 7.06 billion cubic feet of gas before the storm.

Among the big Canadian energy names losing ground on Tuesday, Suncor fell nearly 10 percent C$54.91, Imperial dropped more than 8 percent to C$50.05 and Nexen Inc NXY.TO, which has U.S. Gulf operations, sank 8 percent to C$30.68.

Nexen spokesman Michael Harris said the company, Canada’s No. 4 independent oil explorer, did not know yet whether any of its Gulf of Mexico facilities suffered any damage.

$1=$1.07 Canadian Editing by Rob Wilson

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