BP Shares Surge After Cap Stops Oil Flow

BP shares rose about 8 percent and other energy stocks rallied as the British oil giant said it succeeded in stopping the flow of oil into the Gulf of Mexico for the first time since April.

Shares rose $2.74, or 7.6 percent, to close at $38.92 Thursday, They were up about 3 percent as BP began testing a cap atop the gushing oil well. The shares shot higher in the last hour of trading after BP announced the oil had been stopped when all valves on the cap were shut, as part of the test.

The shares have gained about 46 percent since hitting a 14-year low of $27.02. But they're still well below the $60.48 they fetched on April 20 when a BP-operated rig exploded and set off the oil spill that lasted 85 days.

The AMEX Oil Index, which includes BP among its 13 components, rose 9.93 points to 971.83 as shares in prominent energy companies added to gains or reversed losses late in the day.

Stopping the oil is a long-awaited milestone in one of the nation's worst environmental disasters. BP must wait to see if the cap can hold the oil without blowing a new leak in the well. The oil company is drilling two relief wells so it can pump mud and cement into the leaking well in hopes of plugging it for good.

When the shares closed at $27.02 on June 25, they had lost $104.73 billion since the rig explosion. The recent rally has recaptured $37.25 billion in value.

Argus Research analyst Phil Weiss said that "as long as news around the spill continues to have a positive spin," he expects the stock "to show an upward bias."

Shares of other companies with ties to the spill jumped as well. Transocean Ltd., which leased the rig to BP, rose $2.34, or 4.5 percent, to $54.70. Shares of Anadarko Petroleum Corp., BP's partner in the blown-out well, gained $1.50, or 3.2 percent, at $49.08. Both stocks remain significantly below their April 20 levels.

Other major oil companies rose as well. Exxon Mobil shares were down about 56 cents before rebounding to close up 1 cent to $59.27. Chevron Corp. and Total SA had similar rallies.

Drillers also recovered. Shares of Diamond Offshore Drilling, which recently said it was moving an oil rig out of the Gulf to Mexico to Egypt because of the Obama administration's drilling moratorium, leapt in the last half-hour of trading from $64.21 to a close of $65.91.