A version of this story appears in the October 2017 edition of Oil and Gas Investor. Subscribe to the magazine here.

With the recent trough in energy sentiment approximating all-time lows, it’s easy to assume that brighter days must lie ahead. But how did sentiment crumble to the point that long-time energy observers cite “capitulation?” Others compare recent conditions to Saudi Arabia’s abandonment of its swing producer role in 1986, or investors’ exodus from energy in the dot-com mania in 1999.

Certainly, the ranks of energy investors have thinned markedly. Energy’s weighting in the S&P 500 has slumped to just 5.7%, down from a peak of 16.2%. One energy specialist estimates that a score or more of energy hedge funds will close up shop. On the commodity side, famed crude oil trader Andy Hall plans to shut down his main fund at Astenbeck Capital Management LLC following double-digit losses.

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