Biofuels Stock and Financial Outlook for September 28: Stocks expected to open down as oil prices rise

September 28, 2007

Stocks are expected to open down this morning as futures fell for the major stock indices amidst concern about rising oil prices. US crude oil closed at $82.90. Personal consumption and purchasing manager reports are due today, which will weigh on market sentiment. Among biofuels stocks, investors will measure the impact of Archer-Daniels-Midland’s deal with ConocoPhillips to develop bio-crude, a crude oil made from biomass.
The Biofuels Digest Indexâ„¢, a basket of 21 public biofuel stocks, rose 0.89% to 100.16 as investors returned to the sector for a second straight day following a capital flight earlier in the week. Oil rose to more than $82 per barrel, prompting reconsideration of the merits of Big Ethanol. Major ethanol players Pacific Ethanol (PEIX), Aventine (AVR), VeraSun Energy (VSE) and Archer-Daniels-Midland (ADM) were all up for the day, with Pacific Ethanol rising 8.97% to $9.48.

Earlier in the day, all major ethanol stocks were down on news of a downgrade by Goldman Sachs analyst Arjun Murti. Murti cited poor pricing and cost outlooks in cutting his share price targets and said that there might be a “dead cat bounce” proving short term gains as investors took advantage of the low stock price, but that fundamentally the stocks would continue their downward spiral.

The broader markets were up modestly today, with the Dow up 34.79 points to 13912.94, the S&P up 5.96 to 1531.38, and the Nasdaq up 10.56 to 2709.59.

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Written by Jim Lane · Filed Under Biofuels Digest Index (BDI), Stock & Financial Outlook