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Quarter-End Insights

Energy: A Drop in Oil Prices Has Made Energy Stocks More Attractive

Given our bearish long-term oil outlook we think investors are more likely to find value in the volume-driven areas of the sector, namely midstream and refining.

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After outperforming the broader market for most of 2018, the Morningstar Global Energy Index dropped 22% in the fourth quarter through Dec. 20. (Exhibit 1), owing to the steep drop in oil prices that began in October.

Exhibit 1: Global energy index vs. global equity index

Jeffrey Stafford has a position in the following securities mentioned above: SLB. Find out about Morningstar’s editorial policies.