With the coronavirus threatening to derail the global economy, it’s easy to see why the markets have hit a huge patch of volatility. Perhaps no sector has been harder hit than the energy patch. Already reeling from lower demand due to the trade war with China, the coronavirus and its effects have started to crimp prices even further. And just when there was a glimmer of hope – courtesy of OPEC – the rug has once again been pulled out from beneath many energy stocks.
As prices for crude oil/natural gas have hit lows not seen in decades and with no immediate price boost on the horizon, many energy stocks are caught between a rock and a hard place.
And so are their investors.
Crude oil now remains far below the break-even point for even some of the most efficient and cost-effective shale producers. With a prolonged downturn in oil now predicted, this could mean the end of the juicy dividends and buybacks for the energy patch. For investors looking for income, the sector may not be all it’s cracked up to be.
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