According to the IEA, oil prices are in for a nasty ride as the glut is only going to get worse next year. While there may have been some optimism on the oil price front with a couple of handfuls of trade war candy tossed around by both Washington and Beijing yesterday, that is being offset by speculation that Trump is going to let up on Iran, which could - sooner rather than later - mean more barrels in the market. The bigger fundamental picture, the IEA points out, is that the glut is growing, even if relentless stockpiling has taken a bit of a break right now.
Big Oil Down, But Not Out
Exxon has slipped out of the S&P 500’s Top 10 most valuable companies… BP is facing a shareholder resolution forcing it to justify spending in line with the Paris climate goals, and it’s already promised to sell off any assets that would keep it from complying with those goals.
And on a broader scale, energy companies, in general, are slowly accounting for less and less of the S&P 500’s total value.
The reason for this downtrend in energy stocks is multi-faceted. Investor activism is working hard to bring climate issues to the forefront. Oil and LNG prices are low and languishing, putting the squeeze on companies that aren’t lean and mean, and stifling investment in new high-cost projects. And then there is probably the largest headwind facing Big Oil: faltering demand growth.
But most of Big Oil is doing what it must to…