What Prompted Suncor Stock to Fall 30% in the Fourth Quarter


Jan. 3 2019, Updated 9:45 a.m. ET

Comparing Suncor stock’s performance with SPY’s

Suncor Energy (SU) stock has fallen 30% since October 1, the beginning of the fourth quarter, while the SPDR S&P 500 ETF (SPY), a broader equity market indicator, has fallen 15%. Peer Royal Dutch Shell (RDS.A) has fallen 16% since October 1, and Chevron (CVX) and BP (BP) have fallen 13% and 18%, respectively.

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Suncor stock falls in the fourth quarter

In the fourth quarter, oil prices fell steeply, with WTI, the benchmark oil, falling a whopping 40%. Oil prices have slumped due to fear of supply glut in 2019—global oil demand is expected to be lower than the global supply, despite OPEC’s announcement of production cuts. Weak global economic growth, which has affected equity markets, is expected to impact oil demand.

Recently, the Government of Alberta announced oil production cuts to deal with the province’s supply glut, cutting production by 325,000 barrels per day in the first quarter of this year. This cut will then be reduced to 95,000 barrels per day for the rest of the year. Despite the cuts, Suncor expects its production to rise ~10% this year. Also, Suncor’s third-quarter adjusted EPS of 0.96 Canadian dollars missed analysts’ estimate by ~4%.

In short

Suncor stock has plunged due to oil prices falling, the Government of Alberta’s production cut announcement, and the company’s lower-than-expected third-quarter earnings. Next, we’ll see what Suncor’s moving averages suggest.


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