What happened

Shares of RigNet (RNET) are down more than 10% at 3:09 p.m. EDT on Oct. 1, in what has proven a pretty bad day for offshore energy investors in general. Many offshore drilling stocks, including Transocean, Seadrill, and Valaris, are down between 5% and 10% at this writing.

So what

Often when there's a big sell-off like today's, there's an obvious reason -- such as an underwhelming earnings report -- that investors are selling. Other times, there's not a clear-cut "here's why" that we can point to. So goes investing in the energy sector.

Worker on an oil platform

Image source: Getty Images.

Unfortunately, today's one of the days with less-clear reasons for investors selling RigNet and other offshore-focused energy stocks. If there's any one thing we can point to, it's that oil prices have been steadily falling over the past two weeks, after they surged following the attacks that caused a major outage at a Saudi Aramco oil processing facility.

Oil prices are falling for a couple of reasons. First, the Saudi oil processing facility and associated oil fields are now, according to reports, back to the same capacity as before the attacks. That has oil prices returning to their levels prior to the outage, as certainty around global supplies -- not to mention the proper balance of oil types to meet refinery configurations -- means stability in the near term.

Second, there are growing concerns on the demand side. The World Trade Organization recently cut its commerce forecast, due to concerns that the ongoing U.S.-China trade war would continue to weigh on the global economy. There are signs the economy is already slowing, with major manufacturing indices slumping, and sentiment surveys reflecting a bleak outlook.

Now what

The past two weeks have seen about as close to a reversal in course for oil supply sentiment as one could imagine. Between Saudi Arabia having returned to pre-attack output levels and more signals that the global economy could be weakening, we've gone from fears of shortages that could send fuel prices skyrocketing, to the risk of an oversupply sending oil prices falling further.

And that, in a nutshell, is the sentiment that's likely driving RigNet's shares down today. Low oil prices are viewed as bad for its prospects, since much of its business is tied to demand for offshore work.

And that's true over long periods of time; for proof, you only have to look at how much offshore investment has lessened over the past few years. Big moves like today's drop might be directly attributable to oil-price movements over the past couple of weeks, but RigNet's business prospects are tied to longer-term trends.

In that regard, there's some evidence that offshore drilling work is recovering: Spending will likely increase by double-digit rates this year, and could increase again in 2020. However, offshore activity and related spending are still well below their peak in 2015, and it's far from certain that spending will return to those prior levels anytime soon.

That's not to say RigNet's prospects are bad, but it's evident that the market may need to reset its expectations. Days like today are a painful part of that process.