Oil-stock plunge erases $17 billion as Exxon hits 5-year low

8/24/2015

JOE CARROLL

NEW YORK (Bloomberg) — Oil and gas producers dropped to their lowest level in almost four years as collapsing markets in China heightened concern that demand will falter, aggravating a glut.

An index of 40 energy explorers, refiners and drillers lost $17 billion in value, declining 2.1% at 12:49 p.m. in New York trading. The group earlier tumbled as much as 5.5% to the lowest since October 2011. The slide extended Exxon Mobil Corp.’s year-to-date decline to 24%, putting the world’s biggest oil producer by market value on track for the poorest annual performance since at least 1981.

Stocks around the world plunged as a rout that began with the Aug. 11 devaluation of China’s yuan rippled through European and U.S. markets. Commodities fell to a 16-year low, Treasury yields dipped and U.S. crude fell below $38/bbl for the first time since February 2009.

“It’s a bloodbath,” said Mark Hanson, an analyst who follows U.S. crude explorers at Morningstar Inc. in Chicago. “We’re at an intersection of a lot of bad news.”

Market Turbulence

Some of the biggest losers in the Standard & Poor’s 500 Energy Index included shale oil pioneer Continental Resources Inc., which plunged as much as 25%, and Anadarko Petroleum Corp., which dropped as much as 16%. Crude futures for October delivery declined 3.6% to $38.99/bbl in New York after dipping to $37.75.

Deal activity among energy-focused investment bankers and project financiers screeched to a halt as potential investors eyed the market turbulence and sat on the sidelines, said Christopher Geier, partner-in-charge at Sikich Investment Banking in Chicago.

“The guys who are looking to invest money get really nervous when they see the markets turn like this,” Geier said. “Sitting on cash and doing nothing seems to make them feel better.”

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