With the double negatives of a demand-culling pandemic and wildly declining sentiment trouncing the oil and gas and pushing companies to record lows, with $30 billion in collective debt, trying to pick a winner in this sector is growing more challenging by the day.
On the demand front, the IEA has just cut its 2020 oil production forecast by 140,000 bpd to 91.9 million bpd, sending the FTSE 100 index down 73 points, citing the airline industry’s troubles as a key source of weakness in the oil market.
But the megatrend of ESG, or “impact” investing, is the wider threat to the oil and gas industry, with energy stocks finding themselves in the penalty box due to heightened concerns about ever-rising carbon emissions and poor governance. It’s all prompting capital fleeing the sector at an unprecedented rate—even faster due to the pandemic.
The energy sector has been the worst performer in the S&P 500, gaining just 34% over the timeframe according to Refinitiv data. And in the three-month period to June, Big Oil posted massive losses as the demand shock set in.
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Source: Oil Price