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Dan Dicker

Dan Dicker

Dan Dicker is a 25 year veteran of the New York Mercantile Exchange where he traded crude oil, natural gas, unleaded gasoline and heating oil…

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What Explains The Poor Performance Of Oil Stocks?

Rig

It’s amazing – I was so much more comfortable holding oil stocks last year – when oil was trading fifteen dollars lower and more, than I am right now. It’s certainly getting a lot tougher out there in energy land, with our stocks acting – well, actually pretty badly – despite all the positive analytics we can throw at them.

So, what the heck is going on with our beloved energy stocks?

Well, surely the new-found volatility in the markets at large have something to do with it. With the latest FED indications that interest rates are headed higher (even if slowly), we know that the easiest of the easy money era is over. That’s going to impact all stocks, not least our leveraged oil producers.

But it can’t be just that. Interest rates shouldn’t be a tremendous cash-flow killer any time soon, not with the general discipline that oil companies have shown cleaning up their balance sheets in the last three years.

And, despite the enormous recovery that the stock markets have experienced since the big volatility-spiked drops earlier this month, oil companies not only took the worst of the drops, but have been severely under-performing the rest of the market on this huge rally back.

What could be the reasons for it?

There’s no doubt that earnings performances from many of the oil companies reporting 4th quarter activity of 2017 over the last few weeks haven’t been stellar. Exxon-Mobil,…

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