Is Now the Time to Buy Oil Equipment and Services Stocks?
Investors in the oil sector can be excused if they are bemused by the current debate around the industry and oil services stocks in particular. The bears think energy demand is about to fall off a cliff due to a recession and expect the worst for oil services companies. Meanwhile, the bulls believe the industry will undergo a multi-year expansion in investment following an extended period of declining spending. So which side of the argument makes more sense?
There's no shortage of recessionary talk in the financial markets and for a good reason. There's ample evidence of a slowdown in consumer spending, with leading companies exposed to consumer discretionary spending warning of more challenging times ahead. Oil demand will decline if that blows over to a protracted economic downturn.
Indeed, oil equipment and services giant Baker Hughes' (NASDAQ: BKR) CEO Lorenzo Simonelli talked of a "deteriorating" demand outlook during the company's recent earnings call. Meanwhile, other economically sensitive commodities, copper being a prime example, have sold off after disappointing data on the economy from China.
Source Fool.com
