The Beach Energy Ltd (ASX: BPT) share price has crashed more than 3% on the ASX this morning after a major Chinese oil company reported a 76% drop in quarterly profit and concerns over Venezuela crude output persist.
What caused this morning's share price crash?
The world's second largest oil producer, Sinopec Corp (HKG: 0386) reported Q4 2018 profits had fallen 76% as the company's refinery operations profitability plunged 90% in the fourth quarter.
The company also announced that oil production is expected to decline from 2018 numbers to 288 million barrels of output, down marginally from the 288.5 million barrels recorded last year.
What else has pushed Beach's share price lower?
As a leading Australian oil and gas exploration company, Beach has seen its share price surge more than 60% in 2019 alone on strong domestic gas prices and high oil prices – but headwinds are beginning to build for the energy company.
Global oil prices have been steadily falling in recent days on fears of slowing economic growth and the ongoing US-China trade war, which has seen the Beach share price drop 5% of its gains in the last week alone.
The inversion of the U.S. 10-year Treasury yield below 3-month T-Bills for the first time since 2007 has done little to settle the market nerves over the weekend, as it is seen as a precursor to economic recession, with oil prices looking set to fall further as Venezuelan geopolitical tensions continue to build.
So is Beach in the Buy basket?
A sustained rebound in global oil prices on the back of supply cuts from OPEC has also helped push Beach to be one of the top S&P/ASX200 Index (ASX: XJO) performers this year.
The oil and gas industry remains at the mercy of government energy policy (or lack thereof) and will surely see some volatility in the months before and after the May Federal Election. I don't think Beach's short-term share price struggles are over, but I do think the long-term outlook for the company remains sound.
For those looking for something a little edgier than the Energy sector, this top-rated stock in a booming new-age industry could give you the edge as a growth investor in 2019.
