[Editor's note: A version of this story appears in the August 2019 edition of Oil and Gas Investor. Subscribe to the magazine here.]

Zigzagging a path through recent trade friction and geopolitics has often been bewildering. Is market sentiment for the day “risk-on” or “risk-off”? A Wall Street Journal article likened the “risk-on, risk-off” phenomenon to market forces being split into two buckets. One has “haven assets” that rally when investors “grow skittish.” The other has “growth assets” that rally as “risk appetite returns.”

To state the obvious, commodities like oil are not risk-off or haven assets. And “skittish” is likely an understatement of energy investors’ mood. A recent Simmons Energy note detected some “increased investor scrutiny in assessing risk/reward” in energy. However, it noted “the complexity factor has never been higher as multiple externalities continue to drive a wide range of outcomes.”

According to the Simmons note, generalist investors have set a high bar to consider returning to energy.

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