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An American Airlines Boeing 737 Max 8 aircraft.
Scott McIntyre | Bloomberg | Getty Images
Shares of industries with high fuel costs like airlines and cruise-lines dropped on Monday as crude oil and gasoline futures spiked. Shares of retailers fell on fears higher gasoline costs would hurt future sales and hurt profit margins.
Oil prices are soaring after an attack on Saudi Arabia’s oil industry over the weekend forced the kingdom to cut its oil output in half. Brent crude futures, the international benchmark, rose as much as 19.5% to $71.95 per barrel and U.S. West Texas Intermediate (WTI) futures climbed as much as 15.5% to $63.34. U.S. gasoline futures surged more than 9%.
The event marks the largest disruption to the world oil supply in history, knocking out about 5.7 million barrels per day.
American Airlines is down 3.7%, Delta Airlines is down 3.1%, Southwest is 2.8% lower and Alaska Air is down 2.3% in premarket trading Monday. Carnival Corp lost 3% and Royal Caribbean dropped 1.9%.
Evercore ISI said a spike in oil prices could “require a resent of revenue expectations” for airlines.
“Higher fuel serves as a healthy reminder of the volatility of the inputs and may prove timely as carriers contemplate ’20 growth plans and cadence of Max returns,” said Evercore’s Duane Pfennigwerth in a note to clients Monday.
Shares of retailers L Brands, Walmart, Dollar General and Amazon were also lower in premarket trading.
Meanwhile, Devon Energy is 14% higher, Marathon Oil is up nearly 12%, Cimarex Energy rose 9.5%, Concho Resources is up 9% and Noble Energy and Diamondback Energy are both up 8%.
Morgan Stanley said exploration and production companies are the best positioned within the Energy Sector to capture the benefit of the short-term rally in oil prices.
Occidental Petroleum rose 7%, Chesapeake Energy rose 16%, Callon Petroleum rose 13%, Oasis Petroleum was 18% higher and Whiting Petroleum jumped 24%.
“While higher leverage and cost structure mid-cap stocks might rally most in response to the price spike, we continue to prefer low cost structure companies that are positioned to outperform in any oil price environment,” said Morgan Stanley equity analyst and commodities strategist Devin McDermott in a note to clients on Monday.
Gasoline companies Exxon Mobile and Chevron are both up 3%, while shares of oil field service companies Halliburton and Schlumberger are up 5% in extended trading.
—with reporting from CNBC’s Michael Bloom.
