Energy sector missed the indexes recovery, whats next

In terms of sector performance, it was clear that the adjustment at the beginning of this month was driven by expectations of high interest rates in 2018. Shares in the energy, telecommunications, and real estate sectors declined as companies operating in the sectors use a large debt to finance their business. High interest rates will have the most impact on the energy sector, and despite rising markets, the likelihood of rising will remain low. How bad is it really for energy companies? If we compare the movement of the SPX Energy Index to the price of oil, it makes the impression that the latest price recovery of the raw material barely "breaks" the index from the bottom.

According to a large number of Wall Street players, the fall in the energy sector is not only due to high interest rates. Analysts are of the opinion that high US oil exports are getting better prospects, and this significantly lowers oil price expectations among investors. Oil investors are of the opinion that the price of black gold will keep between $60 and $65 a barrel in 2018.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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