For instance, BP Plc (NYSE: BP) plans to sell $3 billion to $5 billion in assets next year and divest a further $2 billion to $3 billion of assets in 2017.
This isn’t the first time the energy sector has been forced to tighten their belts. Through 1987 to 1997, companies suffered through an extended period of lower prices and responded by cutting costs, which ensured “earnings grew strongly,” according to Bernstein research.
Consequently, some money managers are betting that these belt-tightening measures may lead to profitability later on.
“As a long-term investor I love the foundation of low inflation, low input costs and technology making us energy independent, but as a trader, I understand that, in order to achieve that goal, the short-term dislocations will be staggering. The velocity of the move will be based on the movement of the dollar in conjunction with other major global currencies,” adds CNBC.
Energy Select Sector SPDR ETF
