BP stock gives up early gains as analysts remain concerned about costs

BP shares rise slightly as storm stays away

NEW YORK — Investors in BP shares erased almost all of an earlier 5 percent gain Monday as the pace of spending on cleanup costs in the Gulf of Mexico escalates for the British oil giant.

Investors bought shares early as concerns abated that a tropical storm was headed for the rigs tending to the massive oil spill in the Gulf. BP also denied a report out of Russia that CEO Tony Hayward would resign.

The big concern for analysts remains the cost of the containment and cleanup efforts, now around $100 million per day.

BP shares rose 11 cents to $27.05 on the New York Stock Exchange after hitting a high of $28.03 in the morning. The shares have lost more than $100 billion in value since the April 20 blowout that sunk the Deepwater Horizon as started the oil spill.

BP’s ruptured well has gushed as much as 131 million gallons of oil into the sea so far. BP, which is primarily responsible for the cleanup, said it has spent $2.65 billion handling the spill.

Earlier this month, the company suspended its dividend and promised to set aside $20 billion to cover damages.

Raymond James analyst Pavel Molchanov said the initial bump in shares Monday amounted to a “relief” rally. Fears that Tropical Storm Alex would hit the spill area have subsided but the storm could still produce winds and waves that hamper recovery efforts.

“It’s not as severe as what people feared at the end of last week,” Molchanov said.

A major storm would likely force BP to pull staff back to shore, temporarily halting progress on the drilling of two relief wells. A powerful storm could whip oil like a blender across a wider portion of the Gulf.

As BP deploys more technology to stem the leak, collect the oil and build relief wells, the costs rise more quickly. Molchanov said BP was paying about $8 million a day in early May. That amount jumped to about $100 million per day over the weekend, he said, based on BP’s recent statements.

BP spokeswoman Sheila Williams said the cost of the spill has fluctuated day to day, and the company doesn’t calculate the daily amount. The cost should level off once a relief well is completed later this summer, she said.