Shares of U.S. power generators posted their worst weekly decline in more than six years, dragged down in part by the slide in global oil prices. And they don’t even burn the stuff.
The glut of crude pooling up around the world has cut oil prices 23 percent in three months, and overseas natural gas supplies linked to crude are so cheap that America’s gas exports can’t compete. Traders speculating that more of the power-plant fuel will just remain in the U.S. sent gas futures to the lowest seasonal level in 14 years. And power stocks followed suit last week, with a Bloomberg Intelligence index of generators sliding 12.9 percent, touching a low on Sept. 24 not seen since July 2012.
Power producers continued their slide on Monday with the Bloomberg index falling 1.5 percent to 108.52 at the close in New York. Dynegy Inc. led the declines, dropping 3.2 percent.
“Power price futures have fallen with natural gas prices amid concern about excess shale gas supply, in part because low oil prices may reduce price competitiveness and demand for U.S. liquefied natural gas exports," said Stacy Nemeroff, a utilities analyst for Bloomberg Intelligence. “Investors may also be selling off power stocks as part of a strategy to reduce overall commodity exposure.”
