Oil-Service Stocks Lead Gains In Energy Sector

The energy sector is up today, led by drilling shares. Gains poured in as the Interior Department allowed drilling to resume in shallow waters with new safety regulations.

The Philadelphia Oil Service Index (OSX) rose 1.6% to 166 and the NYSE Arca Natural Gas Index (XNG) jumped 1% to 514. The NYSE Arca Oil Index (XOI) climbed 0.3% to 916.

Shares of the oil major BP PLC (NYSE: BP) plunged 2.73% to $33.73 as the company continues to struggle with fallout from the Gulf oil spill. According to Societe Generale analysts, there exists a 50% probability of the company’s board of directors voting to lower its dividend. Additionally, a British newspaper wrote that shareholders and insiders would favor CEO Tony Hayward and press Carl-Henric Svanberg to step aside as the chairman, in case the US government pushes for a change in the corporate structure.

Diamond Offshore (NYSE: DO) rallied 5.11% to $59.85 after it negated reports that it operated an oil rig at the site of another leak in the Gulf.

Yesterday, the government's Minerals Management Service issued new guidelines for offshore drilling. With the new guidelines in place, the process for permitting new wells in shallow waters will get expedited.

The director of the Bureau of Land Management, Bob Abbey, has been sought to function as director of the Minerals Management Service. "We are following an orderly, responsible process for implementing stronger safety and environmental requirements of offshore drilling. We need to make sure that drilling is done right, that it is done safely, and that oil and gas operators are following the law,” said Abbey.

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