The oil sector has moved to the downside during Wednesday's trading. The negative sentiment has been generated by lower U.S. oil prices.
Among the biggest losers were shares of CNOOC Ltd. (CEO), which declined about 5%, while EnCana Corp. (ECA) stock was substantially down, sliding about 4%.
By 1:05 pm Eastern Time, shares of CNOCC were down $7.38 to $135.86, while EnCana stock was down $2.91 to $68.35.
Meanwhile, other stocks posting notable losses include Suncor Energy Inc. (SU), PetroChina Co. Ltd. (PTR) and China Petroleum & Chemical Corp. (SNP), which were each down about 3%.
Oil prices dropped again on Wednesday, adding to a recent swoon. Light sweet crude for October moved to $108.88, down 83 cents on the session. Oil touched as low as $107.32, which is more than $40 off its record high of $147.27 from July 11.
Experts say Hurricane Gustav, which was downgraded to a tropical depression on Tuesday, did not cause significant damage to the oil region. New Orleans was spared a direct hit as the storm arrived on Monday weaker than many had feared. Additionally, tropical storms Hanna, Ike and Karina are not currently seen as threats to the Gulf of Mexico's oil region.
According to an analyst at Deutsche Bank, "The fact that oil has been struggling to rally with the once potentially severe Gustav forming, tells us we are still in the correction phase lower. However, before we completely move on, a new hurricane, Hanna, is building over the seas around the Caribbean. The hurricane season still has some weeks to go."
Traders await the Department of Energy's weekly inventory report, which will be released at 11 a.m. Thursday, a day late because of the Labor Day break. Crude oil inventories decreased by about 170,000 barrels in the week ended Aug. 24. Analysts were expecting to see a build of about 1 million barrels. Meanwhile, gasoline inventories decreased by 1.2 million barrels last week, and are below the lower boundary of the average range. Market players were expecting a drop of about 2.8 million barrels.
The U.S. dollar gained again on Wednesday in New York versus other majors, reducing the hedge appeal of commodities. The dollar added to a multi-year high against the pound, which fell on disappointing job market and consumer confidence reports released from UK. The greenback also added to a multi-month best against the euro, continuing its recent surge.
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