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Preparing For A Slide In Oil Prices

With the price of West Texas Intermediate (WTI) in the mid-forties, oversupply concerns and the continued threat of a global slowdown have led many to fear a resumed oil price decline. The year-to-date performance of Oil & Gas (O&G) companies, particularly Integrated O&G entities has been strong, further contributing to concerns that oil may be poised to retrench.

The heat map below shows the performance of the Energy Sector relative to the S&P Global BMI Index for each country. The darker green signifies stronger performance relative to the local market.

Quantamental Research

Which strategies or factors have historically been the best performers in an oil price decline regime?
Leveraging the S&P Capital IQ Alpha Factor Library, containing over 500 equity strategies, this brief explores the following questions that should aid investors in positioning for a decline in oil prices:

  • Which strategies or factors have historically been the best performers in an oil price decline regime?
  • In the most recent oil price decline regime, how did those strategies fare versus the longer term history?
  • Were there strategies that worked in the recent oil price decline environment that had not been effective historically?