Why Oil and Gas Stocks Dropped on Monday
The value of oil and gas stocks dropped on Monday as investors prepare for a Federal Reserve meeting on Wednesday. Hopes from a few weeks ago that short-term interest rates may only rise 50 basis points are almost gone and some analysts are expecting a full 100-basis-point increase, which would be the biggest increase in rates in 40 years. The result has been bearishness in energy markets, which are generally driven by growth in economic activity.
Notable moves came from Occidental Petroleum (NYSE: OXY), which fell as much as 3.3% in morning trading; ExxonMobil (NYSE: XOM), which was down as much as 2.4%; Diamondback Energy (NASDAQ: FANG), which fell 3.6%; and offshore rig owner Transocean (NYSE: RIG), which dropped as much as 4.3%. Shares were down 0.6%, 0.6%, 1.3%, and 2.6% respectively at 3 p.m. ET.
The biggest concern for investors today is that interest rates will rise so fast that the economy will go into recession, or make an existing recession worse. That could hurt oil demand and sent the value of West Texas Intermediate (WTI) crude oil down as much as 3.5% in trading early Monday to a low of $82.10. The market's sentiment did change quickly and WTI crude is currently $85.73 per barrel, up 0.7% on the day.
Source Fool.com
