Bear Market for Oil and Gas

There is no other way to put it, 2019 was an awful year for Oil and Gas. The Oil and Gas sector was the second worst performing sector on the UK markets returning a median of -18% for 2019 (just shy of a technical bear market). When you consider the FTSE 250 made +27% and the FTSE 100 +12%, that under-performance is even more dire on a relative basis. What was particularly anomalous was that crude actually gained 21% on the year for Brent (35% for WTI).

With the New Year came new hope of a catch-up given the lag. Not so as the sector has dropped another 10% in 2020 putting us firmly in bear market territory .

While this industry is famously cyclical, there are clear signs that negative sentiment and structural changes have profound implications for this sector which currently accounts for almost 10% of all UK equities by market capital. This article takes a look at these changes in more detail and highlights them against the stellar rise in Alternative Energy stocks.

a .pdf copy of this report is available for download at along with interactive reports of the base data allowing customized research

Sentiment and Money Flows Conspire

2019 was THE year of climate change focus where Environmental, Social and Governance (ESG) took to the fore with record inflows (quadruple 2018 levels) into sustainable funds based on ESG assets while big bad Oil was further vilified. Greta Thunberg stormed both global media and the planet's collective conscience with her dark-eyed "how dare you" war cry to the UN's gathering of the great if not the good. The diminutive teenage Cassandra took on the Trumpian Goliaths becoming an unlikely victor in this most mis-matched of melees. Carbon neutrality, zero-carbon and offsetting have all become part of our everyday lexicon. The result, in sentiment terms, means that oil has now become an even dirtier word and super-majors such as Shell and BP have not just been the targets of Extinction Rebellion's onslaughts but have been unceremoniously booted by their beneficiaries in the performing arts and galleries after decades of patronage. The changes in sentiment have translated into changes in money flows as oil and gas companies now rank with the vice stocks with many pension and endowment funds divesting…

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