Related: Oil ETFs: Worse, Not Better, as OPEC Cuts Back
The challenge for energy equities is that some oil market observers see more declines coming for crude. Oil traders are concerned over how fast U.S. shale oil producers will increase production to capture the rising prices.
While OPEC is cutting back to alleviate price pressures, U.S. fracking companies could jump to capitalize on the windfall as crude oil prices jump back above $50 per barrel – according to some estimates, shale oil producers can get by with oil at just over $50 per barrel due to advancements in technology and drilling techniques that have helped cut down costs.
“Next year’s expected earnings-per-share growth for the sector has held steady at around 44 percent, Gibbs pointed out, but she added that wouldn’t anticipate a real turnaround in energy names until oil stabilizes,” according to CNBC. “WTI crude prices have plummeted as the market continues to contend with a supply glut that remains in place despite OPEC-led production cuts agreed upon at the end of last year.”
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