Oil Takes A Tumble And Sector Ready To Follow

The energy sector could take a dip with the release of second quarter results but unless a sharp rise in crude oil prices, it may not even manage to hold its current levels.

Oil prices have fallen much more sharply than those of shares during the 13 months since their peak of June 23 2014, making the valuation levels of sector companies remain high. The S&P energy index fell by about 30% over the period as price per barrel of crude slumped 50%.

Results for the second quarter in the energy sector are expected above the consensus of financial analysts, who anticipate at this stage a fall of almost 59% compared to the second quarter last year, according to an analysis, which could support their progress.

But the sector remains expensive: PER / E ratio results of the sector index is about 23 against 17 for the S&P 500.

The PER of the sectoral sub-index S&P exploration and production companies is at its highest level since data began to take it into account in 1995. The consensus for the oil producers of the results is based on an average price the gross dollar 65.19 per barrel in 2016, said an analyst.

However, US light crude prices are trading around $ 48 and future contracts highlight an average price in 2016 of about 54 dollars.

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Pete Southern

About Pete Southern

Pete is an active investor with knowledge of all sectors but his first love are IPO's. A failed day trader who now understands research. A love of economics and writing seen Pete begin to publish content for various finance blogs. Our main editor and collator of contributions, he is your point of contact via editorial at stockpricetoday.com

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