Tags: Patel | energy | sector | oil

Wells Fargo's Patel: 'It's Too Early to Look for Bargains in Energy Sector'

By    |   Monday, 01 December 2014 03:13 PM

Energy stocks have slumped this quarter, with the drop accelerating last week after OPEC failed to act to halt the oil price drop. The S&P 500 Energy stock Index slid 8.9 percent last month.

And many experts expect the descent to continue.

"I think it's too early to look for bargains in the energy sector," Margie Patel, a portfolio manager at Wells Fargo Asset Management, told The Wall Street Journal.

"If their [energy companies'] earnings fall even more due to depressed oil prices and low demand for energy services, these stocks could still be expensive, even at these lower prices."

Plummeting oil prices have sparked the plunge in energy stocks. January U.S. oil futures hit a five-year low of $63.72 a barrel Monday morning before rebounding to $66.68.

The oil price rout stems from sluggish demand amid economic stagnation overseas and from bountiful supply, which has expanded amid a surge in U.S. oil production.

"Everyone's paying the price for this drop in oil prices," Jason Kotik, senior investment manager at Aberdeen Asset Management, told The Journal. "Expectations have been ratcheted down."

But not everyone expects oil prices to continue slipping. "The market is in panic mode," Hans van Cleef, energy economist at ABN Amro Bank, told Bloomberg.

"We expect it will bottom out and see an upward correction. Lower oil prices are a stimulant for economic growth, which means extra demand."
 

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Energy stocks have slumped this quarter, with the drop accelerating last week after OPEC failed to act to halt the oil price drop. The S&P 500 Energy stock Index slid 8.9 percent last month.
Patel, energy, sector, oil
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2014-13-01
Monday, 01 December 2014 03:13 PM
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