Good afternoon -
After the May 2020 futures contract for a barrel of oil turned negative on April 20, the running joke became that gas stations would have to pay you to put gas in your car. But then, they realized, the joke was on them. Right now gas stations have no lines and no waiting. The tweets and social media posts ranting about price gouging are non-existent. The nation’s economy has ground to a halt. And with it demand for oil. And it couldn’t come at a worse time. Already the oil and gas sector was undergoing a supply and demand imbalance. Over the last three years, the country’s shale providers have found a sweet spot with oil prices. As a result, the United States became far more energy independent. However, as that happened, global oil prices began to come down. Europe’s economy was already contracting. And then, late last year the coronavirus broke out in China. Immediately demand in one of the world’s largest economy dropped. And with it went oil prices. The sell-off that began in February has only accelerated as Americans remain at home, practicing social distancing in an effort to stem the spread of the virus. And that has created a problem for some of the smaller oil companies that were already struggling to be profitable. Now both profit and revenue seem to be elusive goals for many of these companies. And while the federal government may be coming to the rescue, any help will almost certainly be reserved for the largest oil companies that are deemed “too big to fail.” Which means that several oil companies will do exactly that. Fail. We’ve identified five oil companies that look to be at the highest risk of failure. These companies all share common traits of being unprofitable and carrying high debt levels. You may be tempted to buy the dip on oil stocks. But you should stay far away from these stocks. View the “5 Oil Stocks That May Not Survive the Current Crisis”
Matthew Paulson
MarketBeat | 
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