Energy Stocks Leading—Despite Falling Oil

Energy stocks are again the market leader. The S&P Energy Sector is the first S&P sector to hit a new 52-week high — this, on a day when oil (WTI) is down.

Why are energy stocks up when oil is down? Two points:

1) Brent crude has been moving up aggressively all morning and is dragging WTI along with it — Brent now positive on the day (as of this writing).

2) the general sentiment is that there is a mandate to increase production capacity everywhere — in the Gulf, in Saudi Arabia, everywhere. Anadarko Petroleum CEO Jim Hackett told the same conference in New Orleans that he expected to resume drilling in the Gulf of Mexico in the second half of the year.

Bank of America/Merrill Lynch said it best this morning, calling recent events "The Saudi Arabia of catalysts" and headlining with "International pricing power around the corner."
This, despite disruptions. Schlumberger CEO Andrew Gold, speaking at a conference in New Orleans, said that events in the Middle East were creating "significant" revenue disruptions, and forecast they could shave $0.08-$0.10 a share off profits.

Regardless: Morgan Stanley notes that a "a rapid increase in Middle East activity is imminent, driven by Saudi Aramco." This could shift pricing power to oil service companies, which is why SLB and Baker Hughes and Halliburton are all up about 4 percent.

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