Consequently, Morgan Stanley and Boston Consulting argue that companies need to “undergo a dramatic” cost cutting scheme and change the business culture to sustain savings. For example, after the price declines in the 80s, oil majors implemented cost savings and improved efficiency.
That “allowed strong earnings and share performance in subsequent years, despite an extended period of oil price weakness,” according to the analysts.
The energy sector ETFs are top heavy and include heavy positions in both Exxon and Chevron. For instance, XLE includes 15.7% XOM and 12.6% CVX; VDE holds 20.9% XOM and 11.3% CVX; and IYE includes 21.5% XOM and 11.4% CVX.
Energy Select Sector SPDR
For more information on the energy sector, visit our energy category.
Max Chen contributed to this article.