Falling oil prices hurt sector bonds; Consol weaker on warning of looming loss; coal mixed

By Stephanie N. Rotondo

Phoenix, July 20 – Distressed oil and natural gas names were in focus Monday as oil prices continued to wane.

West Texas Intermediate crude dropped 93 cents, or 1.83% to $49.96, marking the first time the product has fallen below $50 since April.

The weakness in crude has been attributed to supply concerns – that is, worries that there is too much oil on the market, especially the United States, which currently holds a record amount of crude in its stockpiles – this despite the fact that many domestic producers have ramped down production.

Fueling those concerns is the recent nuclear accord the United States inked with Iran, which lifted sanctions on the nation’s oil exports.

Since oil prices started to decline, oil and gas producers have seen their bottom lines shrinking. For one, Consol Energy Inc. warned Monday that lower energy prices will likely result in a loss for the second quarter.

That news didn’t do much to help the company’s bonds.

Elsewhere in the oil and gas space, a trader said Breitburn Energy Partners LP’s 7 7/8% notes due 2023 dropped 3 points to 71˝.

While the oil and gas space weakened, there were some signs of strength in the coal arena.

Traders reported that Peabody Energy Corp.’s debt was moving upward, though there was no fresh news to act as a catalyst.

However, some of Peabody’s sector peers did note fare as well.

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