Perhaps one of the most interesting developments during the current US equities pullback is the steep decline in energy stocks
Perhaps one of the most interesting developments during the current US equities pullback is the steep decline in energy stocks. The energy sector (as measured by XLE) is down about 3 times as much as the S&P 500 itself during the selloff. The energy sector decline can be directly attributed to the fall in the price of crude oil, which has plunged below $82 a barrel (!) and is down 17% year-to-date. Basically, crude oil is dealing with abundant supplies in an environment of shrinking demand - that's the kiss of death for any commodity. What's more, the vast majority of oil recovery operations are profitable down to roughly $80 per barrel. So, there's not necessarily a compelling reason for a rebound in oil prices over the short-term. In other words, it could be a rough quarter or so for energy producers. Stay tuned.
I'm an investments analyst for a US-based independent investment research firm. My focus is on economics, options, and all types of stocks, but especially tech, Internet, and renewable energy companies. I have experience as a options market...
No areas of expertise