Shares of Spectra Energy Corporation SE touched a 52-week low of $32.19 on Jun 29.
What Led to the Drop?
The fortunes of one of North America's leading pipeline and midstream companies, have been greatly hurt by the persistently weak commodity pricing environment. This is due to the fact that NGL prices are constantly trickling down due to a combination of strong supplies and weaker demand of propane and butane during warmer weather conditions.
Meanwhile, natural gas fared only marginally better amid anticipations of robust summer cooling demand with forecasts of warmer-than-average weather across most parts of the country over the next few days.
Also, the company’s crude exposure further increases the bearishness on the stock as the commodity has plunged over 50% since June last year. With crude prices are expected to remain weak throughout 2015, financials are likely to stay pressed.
The West Texas Intermediate (WTI) crude has been trading around the $60 per barrel threshold for quite some time now. This is owing to plentiful supply of the commodity especially in the face of lackluster global demand.
The backdrop for oil trading has been muddled by the ongoing Greek debt impasse, concerns over further rise in Saudi crude production and news about the impending Iranian nuclear deal that has the potential to release more oil into the already oversupplied market. Moreover, a stronger dollar has made the greenback-priced crude more valuable for investors holding foreign currency.
Zacks Rank & Stock Picks
Currently, Spectra Energy carries a Zacks Rank #3 (Hold).
Some better-ranked players in the energy sector are Transmontaigne Partners L.P. TLP, China Petroleum & Chemical Corp. SNP and LRR Energy, L.P. LRE. All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment