Energy stocks sink as BP plummets after 'top kill' fails
Energy stocks, last month's worst-performing major industry sector on Wall Street, are crumbling again after BP failed to stop the Gulf of Mexico oil spill with its "top kill" strategy.
BP shares on Tuesday plummeted as much as 17% in London trading overnight, the biggest decline in 18 years, according to Bloomberg data.
The company's U.S.-traded shares were down $4.94, or 11.5%, to $38.01 at about 10:30 a.m. PDT. The stock has plunged 37% from $60.48 on April 20, the day the drilling rig Deepwater Horizon exploded.
BP Chief Operating Officer Doug Suttles announced on Saturday that the top kill operation had failed to halt the flow of oil from the well, which is about one mile below the surface of the sea. The company has launched a new plan to stop the spill but some investors obviously aren't giving BP the benefit of the doubt.
Suttles didn't bolster investors' confidence level after conceding on Saturday that, "This scares everybody -- the fact that we cannot make this well stop flowing."
Shares of other companies involved with the well also were slumping Tuesday. Transocean Ltd., which leased the drilling rig to BP, was down $4.13, or 7.3%, to $52.64; Anadarko Petroleum, which has a 25% stake in the well, was off $7.56, or 14.4%, to $44.77.
As a group, energy stocks in the Standard & Poor's 500 index were down 1.5%, while the S&P 500 index overall was up 0.3%.
In May the S&P energy sector lost 11.8%, the biggest decline of 10 major industry sectors. The S&P 500 overall was down 8.2%. BP's catastrophe was a major drag on energy issues last month, but the sector also was clipped by the 14% drop in crude oil prices as commodity prices in general fell on fears the global economic recovery will slow.
-- Tom Petruno
Photo: BP Chief Operating Officer Doug Suttles at a news conference on Saturday. Credit: Olivier Douliery / Abaca Press / MCT