By Jim Jelter, MarketWatch
SAN FRANCISCO (MarketWatch) -- Oil and gas stocks, after a rough opening, trimmed early losses Tuesday. But the sector's main indexes remained stuck in negative territory as investors locked in some of the strong gains from the previous session.
Modest pullbacks by oil prices and across the broader stock market added to the bearish sentiment hitting the sector.
The NYSE Arca Oil Index (XOI 1,100, -3.45, -0.31%) was last off 1.5% at 1,102 points, cutting in half its opening losses.
Hess (HES 58.12, +0.50, +0.87%) was leading percentage gainers in the group, up 1.3% at $58.34 a share, following an upgrade to buy from neutral by UBS. Heavyweight Exxon Mobil (XOM 74.88, +0.45, +0.61%) was also making headway, up 33 cents at $74.76 a share following an upgrade to overweight from equal weight by Barclays. Sunoco (SUN 26.05, -0.38, -1.44%) was at the bottom of the heap with a 1.7% decline to $25.98 a share.
The NYSE Arca Natural Gas Index (XNG 516.51, -3.75, -0.72%) was off 2.3% at 518 points, with Chesapeake Energy (CHK 24.42, -0.72, -2.86%) setting the pace for decliners, down 2.2% at $24.59 a share.
The Philadelphia Oil Services Index (OSX 200.32, -3.48, -1.71%) was down 2.5% at 201.4 points, rising slightly from opening declines. Heavy pressure on the index was coming from drilling services company Smith International (SII 28.02, -2.74, -8.91%) , whose shares were down 10% at $27.66.
Smith announced plans late Monday to raise about $750 million in fresh capital through a 28-million share common stock offering. Investors were reacting primarily to the dilution the issue would have on the value of existing shares. The move also earned the company a downgrade from Credit Suisse to neutral from outperform.
Meanwhile, the December light crude-oil futures contract on the New York Mercantile Exchange was off 15 cents at $78.75 a barrel, nibbling into some of the previous session's gains as the dollar got a boost from data showing a big drop in a key U.S. price index. Read about energy futures.
