Oil Prices Plunge, Dragging Energy Stocks Down with Them
Oil prices took a dip in early trading, sending energy stocks lower along with them. The Exxon Mobil company scored a regulatory win for its Rose carbon-capture project in Texas, but this development was overshadowed by the decline in oil prices. The West Texas Intermediate (WTI) crude price fell 1.8% to $103.91 a barrel and Brent slid 1.2% to $107.44.
The Energy Select Sector SPDR Fund (XLE), an energy-stock exchange-traded fund, dropped 1.2% premarket due to the decline in oil prices. Exxon shares were still down by 0.9%, despite the company's approval for its carbon-capture project.
According to market trends, energy companies are often priced based on near-term cash flows. This means that if crude is down today, investors assume the next few quarters' profits will be lower across producers and refiners.