Warren Buffett pulls back on oil company investments

HOUSTON – Warren Buffett showed the energy industry his gloomy side in the second quarter.

The billionaire at the head of the more than $200,000-per-share Berkshire Hathaway sold off the vast majority of his stake in Houston’s ConocoPhillips, and he sent some of his holdings in Phillips 66 and National Oilwell Varco back into the market.

Why? It could be because U.S. crude prices have dropped from about $107 a barrel in mid-June to less than $95 a barrel Tuesday, and energy stocks went from being among the best performers on Wall Street to the middle of the pack.

“The group has been weak,” said Gil Baumgarten, president of Houston wealth advisory firm Segment Asset Management. “They’re losing their momentum. That’s pretty clear to me.”

On Tuesday, the price for September futures of West Texas Intermediate fell to $94.48 a barrel, the lowest point in seven months, according to Bloomberg. 

Tales of jam-packed U.S. crude storage tanks and higher exploration costs have discouraged investors amid sinking oil prices, Baumgarten said. Earlier this month, on a day when stocks were riding high and the Dow Jones Industrial Average landed 186 points higher, energy stocks were largely flat – a sign that something’s slowing the sector, he said.

According to regulatory documents filed last week, Berkshire Hathaway sold off $688 million in ConocoPhillips shares, retaining a stake worth $108 million as of Tuesday.  That followed his move last year to sell off 44 percent of his holdings in the Houston oil producer.

Buffett also hawked $279 million in Phillips 66 shares, but held onto two-thirds of his holdings in the Houston refining and midstream firm.

And Buffett sold $125 million in shares of Houston oil field service firm National Oilwell Varco, keeping an interest worth $610.6 million as of Tuesday. He didn’t touch his $4.1 billion stake in Exxon Mobil Corp.

Lately, Buffett has appeared more bullish on his $15 billion bet on renewable energy and other power projects. And in December, Berkshire Hathaway agreed to pay $1.4 billion for one of Phillips 66′s energy transportation units.