One of the major stories of the bullish surge seen by the stock market is the recovery of the energy sector and the stabilization of oil prices. Some might even say that the energy industry is driving the large, long retracement of August losses. After underperforming in late August and the month of September, a reversal in October erased the negative performance and has the sector as one of the major talking points this year. The drivers of price movement in the oil and gas industry have been extensive with reacts to weekly supply and production, the occasional demand outlook report, and even general economic statistics that may warn of more (or less) global weakness. With mixed sentiment, the main problem with energy-related securities is how to determine an appropriate price for an industry ridden with uncertainty. Even earnings reports can be confusing with upstream operations returning losses and downstream doing just the opposite. This is especially the case for integrated service firms that shed no true light on the scope and quality of their businesses. For that reason, energy companies are trading based on sentiment and price changes on the commodities market (WTI and Henry Hub natural gas).
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