Heading into Q1 earnings, the S&P 500 energy sector is expected to report 82.3% year-over-year earnings growth, according to FactSet. The estimated earnings growth was at 55.9% on December 31, which has increased alongside a rise in oil prices and the passage of U.S. tax reform. Over the past several months, there’s been a greater divergence between oil prices, natural gas prices, and the energy sector’s performance (see chart below). thinkorswimCost Cutting Measures and EfficienciesOther than cutting their own production and improving efficiencies, there really isn’t a whole lot energy companies can do during a prolonged downturn in energy prices. If energy prices remain depressed, companies either need to figure out a way to remain profitable, or survive until they recover, something that’s never guaranteed.

Source: Forbes March 22, 2018 20:48 UTC