Why Oil and Gas Stocks Sank Today
Shares of virtually all oil and gas stocks crashed today, with even those regarded as among the "safest" oil and gas stocks plunging in value. Diversified integrated major and Warren Buffett favorite Chevron (NYSE: CVX) fell 5%, pipeline company Enterprise Products Partners (NYSE: EPD) fell 5.3%, and shale explorer and producer Diamondback Energy (NASDAQ: FANG) fell a whopping 9.5% as of 1:15 p.m. ET.
All of these oil and gas-related stocks seem to be following the plunge in oil prices, as November oil futures fell 5.5% at that time to $78.90 as of this writing, similar to the first two stocks. Even natural gas prices, which had been more resilient due to Russia's cutting off gas supplies to Europe, were also falling today, down 3.7% as of this writing and down over 30% from yearly highs just a month ago.
The reasons for the plunge in oil and gas prices aren't difficult to figure out: Since the Federal Reserve released a more aggressive outlook for interest rate hikes on Wednesday, investors appear to think a recession is now inevitable. A global recession would theoretically lead to lower demand for oil and gas. Wednesday's meeting and Fed Chair Jerome Powell's comments appeared to confirm this in the minds of many investors, who are selling cyclical stocks en masse heading into the weekend, including commodity stocks.
Source Fool.com
