Time to stock up on Airline stocks!
The stock market enjoyed a (very) modest relief rally Tuesday but there was no reprieve for oil prices. Brent crude slumped 4.4% to $85.02 per barrel, the lowest levei since 2010; the global benchmark is down 22% year-to-date. Meanwhile, West Texas Intermediate slumped 4.6.% to $81.79, the lowest level since 2012.
Today's decline appears to have been triggered by the International Energy Agency's cutting its demand forecasts for 2014 and 2015 by 200,000 and 300,000 barrels per day, respectively. The IEA cited both supply and demand factors in lowering its estimates, a nod to the deadly combination (for energy prices) of increased global production during a time of decelerating global growth.
Furthermore, the energy watchdog says "most [production] remains profitable at $80 a barrel Brent," suggesting "further oil price drops would likely be needed for supply to take a hit – or for demand growth to get a lift."
This is good news for pretty much everyone other than energy producers and their shareholders. One proxy of energy stocks, the Energy Select SPDR ETF (XLE), is down more than 15% in the past three months, more than triple the S&P 500's (^GSPC) decline in the same timeframe. Weakness in energy stocks like Chevron (CVX) and ConocoPhillips (COP) weighed on the S&P 500, which finished well off the morning highs.
The stock market enjoyed a (very) modest relief rally Tuesday but there was no reprieve for oil prices. Brent crude slumped 4.4% to $85.02 per barrel, the lowest levei since 2010; the global benchmark is down 22% year-to-date. Meanwhile, West Texas Intermediate slumped 4.6.% to $81.79, the lowest level since 2012.
Today's decline appears to have been triggered by the International Energy Agency's cutting its demand forecasts for 2014 and 2015 by 200,000 and 300,000 barrels per day, respectively. The IEA cited both supply and demand factors in lowering its estimates, a nod to the deadly combination (for energy prices) of increased global production during a time of decelerating global growth.
Furthermore, the energy watchdog says "most [production] remains profitable at $80 a barrel Brent," suggesting "further oil price drops would likely be needed for supply to take a hit – or for demand growth to get a lift."
This is good news for pretty much everyone other than energy producers and their shareholders. One proxy of energy stocks, the Energy Select SPDR ETF (XLE), is down more than 15% in the past three months, more than triple the S&P 500's (^GSPC) decline in the same timeframe. Weakness in energy stocks like Chevron (CVX) and ConocoPhillips (COP) weighed on the S&P 500, which finished well off the morning highs.
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