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A second day of low growth for energy stocks marks the sector’s worst Wall Street performance in 2.5 years, according to a new report by CNBC. The news comes as the Dow Jones industrial average fell by 1,175 points on Monday in a drastic market correction.
Energy companies in the S&P 500 dropped 4.4 percent on Monday. Chesapeake Energy, which recently announced layoffs, affected 13 percent of its entire staff, led the pack. The drilling firm Hess, as well as Exxon Mobil and Chevron, saw declines as well due to a continuing sell-off. Hess had just announced larger than expected losses for the last quarter of 2017. Exxon and Chevron disappointed expectations as well.
"Earnings were significantly weaker than expected," said Rob Thummel, portfolio manager at Tortoise Capital Advisors, referring to Exxon and Chevron. "That's what's really driven the S&P energy stocks off more significantly. "I think it's just a clear indicator that people don't believe the oil price, [because] they think it's coming down."
Still, oil price projections are uniformly rosy, compared to current levels. Goldman Sachs beat all other investment banks in their forecasts for the price of Brent crude this year, setting its project at $75 per barrel for the full year. JP Morgan came in second, setting its projection at $70 a barrel. The third most bullish forecast on Brent is from Bank of America at US$64 a barrel.
Related: Will Rising Crude Inventories End The Rally?
The last time declines were this bad was in August 2015, when energy stocks fell 8.5 percent. Since Friday, the Brent and West Texas Intermediate (WTI) barrels lost $2, or 3 percent in value.
"Want to get more positive on HES given world-class Guyana asset ..., but can't point to much that warrants upgrade from Underweight," Capital One analyst Phillips Johnston said in a note on Monday.
Colorado oil and gas stocks have been lagging the rest of the energy market this year as safety regulations get tougher. Last spring, two sites run by Anadarko Petroleum exploded, killing three people. That has raised the specter of tighter regulations to improve safety.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…