Why Oil and Gas Stocks Plummeted Today
Shares of energy stocks were falling broadly today. Even diversified blue chip names such as Chevron (NYSE: CVX) initially fell 2.4% in early trading before recovering to just a 0.7% decline as of 12:35 p.m. EDT. However, smaller-cap names that depend on the growth of the industry as well as the capital markets, such as rig equipment provider Transocean (NYSE: RIG) and early-stage natural gas and LNG play Tellurian (NYSEMKT: TELL), were down much more significantly; they retreated in the high single digits this morning before slightly recovering to a 7.5% and 6% decline, respectively.
While the energy sector had been a big winner this year, it's hard for any commodity to withstand a severe global recession. And if you're a company that needs financing, good luck getting a reasonable interest rate today.
While the world has mostly been fearing a supply crunch this year, high inflation is now spurring central banks around the globe to tighten monetary policy at a very rapid rate. That's causing lots of concern that the speed of interest rate hikes will lead to recession, higher unemployment, and lower oil and gas demand.
Source Fool.com
