Is oil’s relationship with energy stocks slipping?

Schroders
Door oktober 9, 2019 15:51

Is oil’s relationship with energy stocks slipping?

Our chart of the month shows that the link between energy stocks and oil appears to be on the slide. What’s happening?

Typically, the US energy sector trades in tandem with oil prices. The sector is largely made up of household names like Exxon and Chevron, involved in exploration and production. They are known as "upstream" producers. These companies’ profit margins are closely tied to the price of oil, so we expect the markets to speak to each other. However, over the last three years we have witnessed a breakdown in this relationship. In the time since it bottomed in the first quarter of 2016, oil has gained $21/barrel, but energy stocks have underperformed the main US stock market index, the S&P 500, by 12% per annum.

Schroders
Door oktober 9, 2019 15:51

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Asset Allocation Consensus September

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