Why Energy Stocks Have Been Crushed Today

Energy stocks are getting crushed today on a number of negative factors. Weak earnings reports at some large conglomerates have investors worried about global growth, and if the global economy doesn't grow, the need for more oil and gas diminishes. As a result, oil and gasoline prices are down significantly today, and energy stocks are moving lower.

What's really going on
The price of oil has dropped dramatically over the past three days and is now trading near $86 per barrel, a 3% drop from yesterday. A rising dollar and worries about economic growth are having a negative impact today and will likely put pressure on the commodity going forward.

As a result, oil explorers are being crushed across the board. Continental Resources (NYSE: CLR  ) , Kodiak Oil & Gas (NYSE: KOG  ) , and Enerplus (NYSE: ERF  ) are all down over 2.5% on the oil news. Sandridge Energy (NYSE: SD  ) is the laggard of the group, falling 5% in trading today. These companies won't likely see earnings hit in the near term because they can hedge production, but long term, they may see a decline in revenue and earnings if the price of oil remains low.

It isn't just energy stocks that are falling today -- so are companies tied to gasoline. The price of a gallon of gas is down $0.12 in just the last week, and the price of gas has fallen for 12 days in a row. As a result, refiners and marketers Phillips 66 (NYSE: PSX  ) , Marathon Petroleum (NYSE: MPC  ) , and Valero Energy (NYSE: VLO  ) are all down precipitously. Valero and Phillips 66 are both down over 3.5%.

Impact on the economy
Ironically, the falling price of oil and gasoline is good for the U.S. economy because it will leave more cash in consumers' pockets. That will help this slow recovery take hold, and I think it will bring commodity prices up again.

Oil has dropped near $80 per barrel twice in the last two years only to rebound, and unless we head into a recession, I think it will do the same again this time. Today's worries are a great buying opportunity for the long-term investor. One such opportunity to look into is SandRidge.

Investors were startled after SandRidge plummeted when natural gas prices reached 10 year lows, but with the company halfway through its ambitious three-year plan to profitability, the future looks bright. If you are unsure about the future of this emerging oil and gas junior and are looking to find out more about its strengths and weaknesses, you should view this brand-new premium report detailing SandRidge's game plan and what to expect from the company going forward. To get started -- click here!

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw

The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2071313, ~/Articles/ArticleHandler.aspx, 10/22/2014 11:30:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement