By Steve Gelsi, MarketWatch
NEW YORK (MarketWatch) -- Energy stocks gained Monday as an upgrade of Exxon Mobil and higher crude oil prices leant strength to the sector.
The NYSE Arca Oil Index (XOI 1,005, +6.56, +0.66%) rose 0.4% to 1,002. The NYSE Arca Natural Gas Index (XNG 518.48, +4.36, +0.85%) rose 0.6% to 517. The Philadelphia Oil Service Index (OSX 192.16, +2.46, +1.30%) rose 1.1% to 192.
Among stocks in the spotlight, Exxon Mobil (XOM 65.38, +0.58, +0.90%) rose 1.2% to $65.12. The oil major drew an upgrade to buy at an $80 price target at Collins Stewart.
"We believe Exxon Mobil's recent share price slide and its defensive qualities tip the risk-return balance in Exxon's favor, substantiating our increasingly positive view on the stock," analyst Katherine Lucas Minyard said in a note to clients. "At this point, we see Exxon as offering the most compelling risk-reward balance in our coverage universe."
With its share price down 11% since announcing its blockbuster acquisition of XTO Energy (XTO 45.72, +0.72, +1.60%) in December, negative sentiment against Exxon has gone too far, says analyst Minyard said. The company offers investors an AAA credit rating, strong balance sheet and generous free cash flow generation, she added.
Meanwhile, crude future rose to trade over the $71 a barrel mark, providing support for energy stocks.
Concerns over European debt eased slightly following a rout in global markets last week, but expectations that demand will remain weak capped gains.
On a related energy note, OPEC Secretary General Abdalla El-Badri complimented efforts by the Commodities Futures Trading Commission to limit speculative trading in futures. In an interview with Dow Jones, he said the move will reduce volatility and marks a step in the right direction.
Among movers in the energy sector, shares of Halliburton (HAL 28.93, +0.64, +2.26%) rose 2.4% to $28.95, and Ultra Petroleum (UPL 46.65, +0.84, +1.83%) advanced 2% to $46.73.
