“Credit Suisse analyst Jan Stuart said on Friday that U.S. crude-oil production “is simply, really falling.” This is, of course, just what Saudi Arabia is trying to accomplish through its refusal to cut production after oil prices more than halved. Rather than to follow its traditional course of propping up the price of oil, the kingdom, along with its OPEC partners, is trying to squelch the U.S. shale-production industry that transformed the international oil market. The strategy is working because shale production is much more expensive pumping from traditional wells. For one thing, shale production requires the continual development of new sources and the building of new rigs,” reports Phillip Van Doorn for MarketWatch.
Investors need to identify the sector’s strongest names, which are likely also its biggest members. The larger integrated oil companies are more flush and have a larger war chest to draw upon when times get tough. While big oil has cut stock repurchase plans to save cash, many bigger players have not gone so far as to cut back on dividends. For instance, Exxon and Chevron have historically exhibited a long standing of steadily increasing dividends and remain so-called dividend aristocrats. [Oil ETF Dividends Appear Safe…Sort Of]
Energy Select Sector SPDR
