Cnooc Falls by much as 13% as Oil Prices Slump

China's biggest offshore oil producer, Cnooc Ltd, fell the most in almost nine months in Hong Kong on concerns the slump in crude oil prices may stifle earnings.

Shares of the state oil company plunged as much as 13 percent, the most since Jan. 22, to HK$6.60 and traded at HK$6.63 as of 12:08 p.m. Cnooc was also the largest loser on the 40- member MSCI AC Asia Energy Index.

U.S. crude oil prices have dropped 39 percent in almost three months, dragging down the share prices of Cnooc and bigger rival PetroChina Co. Last month, Goldman Sachs Group Inc. slashed its 2009 oil price forecast by more than 20 percent to $110 a barrel from $140 on slowing global economic growth.

“Oil stocks are falling because of drops in crude prices,” Wang Aochao, a Shanghai-based analyst with UOB-Kay Hian Ltd., said by telephone today. “Oil prices will be under pressure in the short term as demand wanes.”

Cnooc's first-half profit climbed 89 percent to a record 27.54 billion yuan ($4 billion), in step with higher output and a 46 percent jump in crude oil prices during the period.
Arjun Murti, the Goldman Sachs analyst who predicted a crude “super spike” in March 2005, said in a research note on Oct. 6 that a sustained rally in oil prices is unlikely because of concerns fuel demand will weaken.

The benchmark crude futures contract in New York, which reached an all-time-high of $147.27 a barrel on July 11, dropped 1.23 percent to $88.95 a barrel as of 12:45 p.m. Singapore time.

PetroChina, the nation's largest oil producer, fell as much as 9.6 percent, the biggest drop since Sept. 18, to HK$6.50.

China Petroleum & Chemical Corp., which has both exploration and refining businesses, declined 7 percent to HK$5.21. The benchmark Hang Seng Index retreated as much as 5.8 percent to 15,830.88.

Author: Jo Amey