(Repeats Friday story with no changes)
By Chuck Mikolajczak
NEW YORK Feb 10 Buoyant oil prices since Donald
Trump's election have provided no lasting halo effect for energy
stocks as the sector's profit rebound has lacked vigor, but that
could change in the week ahead with a fresh crop of quarterly
Helped by OPEC output cuts, oil prices are up roughly 20
percent since Trump's victory, and U.S. crude has held
above $50 a barrel since mid-December. U.S. Commodity Futures
Trading Commission positioning data shows hedge funds and other
speculators hold near-record-high net long positions in U.S.
crude futures and options.
But the S&P energy index, one of the key drivers to
the stock market rally in the early days following the Nov. 8
election, has not kept pace. It has slumped nearly 4 percent for
"We are seeing a little bit of a difference of opinion
between equity investors and commodity investors," said David
Lefkowitz, senior equity strategist at UBS Wealth Management
Americas in New York.
"Equity investors seem a little bit more worried about the
outlook for the commodity and the actual commodity investors
themselves don’t seem to be reflecting that."
Should those opinions converge and energy stocks rebound,
stocks could see more pronounced moves than have been seen in
recent weeks, with the S&P 500 unable to register a move
of more than 1 percent in either direction since Dec. 7.
The relationship between the energy sector and U.S. crude
has also tightened recently, with the 10-correlation at 0.61,
its highest in three weeks.
Part of the underperformance in the sector looks to be
attributable to a disappointment in quarterly results. Energy
companies were expected to benefit from easy comparisons with
last year, when the price of oil sank below $30 a barrel, but so
far they've under-delivered against those expectations.
Thomson Reuters data through Friday morning shows energy
sector earnings for the fourth quarter are on pace for a
fractional decline. A month ago they were seen rising by nearly
Moreover, the group has so far posted a beat rate of only 58
percent, as measured by the number of companies in the sector
posting better-than-expected results, well below the 68 percent
rate for the S&P as a whole.
"Understand when you think about the energy patch in
general, you have to separate out what the fully integrated guys
were doing," said Art Hogan, chief market strategist at
Wunderlich Securities in New York.
"What drags the group down is when you lump in the majors,
and they were spotty."
That should put the focus on the next leg of earnings from
energy companies next week, when names such as Marathon Oil
, Devon Energy and a host of smallcap companies
in the group report results.
Devon is forecast to post a modest profit after a massive
loss a year earlier, while Marathon is expected to cut its loss
by nearly 90 percent, according to estimates compiled by Thomson
Reuters StarMine. Both posted substantial upside earnings
surprises in their previous reports for the third quarter, and
shares of both have outperformed their peers since the election,
with Devon up 8.3 percent and Marathon up 13.6 percent.
"Definitely we are going to need to see some proof in
earnings to play catch-up here," said Jeff Zipper, managing
director at the U.S. Bank Private Client Reserve in Palm Beach,
"Now we are going to see some clarity from when these
companies report, at least in the sector, to see some follow
(Reporting by Chuck Mikolajczak; Editing by Dan Burns and James