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Investing And Economic Trends Don’t Mix: Just Ask Oil & Gas Stocks

The lowest price that WTI Crude Oil hit this year was US$26.61 per barrel and it did so on 11 February, according to data from Bloomberg. From there, this measure of oil prices has doubled to US$53.53 today.

Given this fierce rebound in WTI Crude Oil in the space of merely 10 months, it would be easy to imagine that 11 February 2016 would have been a fantastic time to buy oil & gas stocks in Singapore’s stock market. I certainly thought so – that is, until I looked at the data.

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I have information on 50 Singapore-listed oil & gas stocks. It may not be a complete list of all the oil & gas stocks here, but I think it covers nearly the entire specturm given that:

  1. there were only 54 oil & gas companies listed in Singapore back in November 2014, according to data from stock market operator Singapore Exchange Limited (SGX: S68); and
  2. my list includes some of the big-wigs, such as Keppel Corporation Limited (SGX: BN4) and Sembcorp Marine Ltd (SGX: S51), and the smaller players, such as KS Energy Limited (SGX: 578).

So, coming back to the performance of the aforementioned 50 oil & gas stocks, I found that they have seen their stock prices decline by 11.9% on average from 11 February 2016 to today. Moreover, 34 of the 50 have delivered a negative return over the same time frame.

This huge discrepancy between the change in the price of oil and the movement of stock prices of Singapore’s oil & gas stocks illustrates a critically important point about investing: An economic trend (in this specific case, changes in oil prices) and the performance of stocks can be miles apart. Please bear this in mind when you invest.

For more investing analyses and important updates about the stock market, sign up to The Motley Fool Singapore's free weekly investing newsletter, Take Stock Singapore. Written by David Kuo, it can help you grow your wealth in the years ahead.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore writer Chong Ser Jing does not own shares in any companies mentioned.