NYSE Floor Trader

Reuters/Reuters – A trader watches the screen at his terminal on the floor of the New York Stock Exchange in New York October 15, 2014. (REUTERS/Lucas Jackson)

By Lionel Laurent | Reuters – Fri, 28 Nov, 2014

LONDON (Reuters) – A fresh slide in the price of crude wiped tens of billions of dollars off oil companies’ market value on Friday and signalled an end to the sector’s safe-haven status, as fears mounted over future profits and dividend payouts.

Fund managers described the last 24 hours of trading as “capitulation” – the point at which a sell-off becomes widespread and panic-driven – as investors reassessed whether the sector could keep gushing cash after OPEC’s decision not to cut oil production to fight a supply glut.

“Oil stocks are currently in the final phase of capitulation,” said UniCredit strategist Christian Stocker.

Oil prices have been sliding for months, but the pain has mostly been felt by oil-services suppliers rather than majors like Royal Dutch Shell or Total. Investors maintained some faith in them based on their record of paying reliable dividends.

That faith appeared to erode on Friday, when $33 billion in market capitalisation was wiped off the sector in Europe. Norway’s Statoil fell 8.2 percent, BP 3.7 percent and Shell 3.3 percent. The STOXX 600 Europe oil and gas sector fell to its lowest since mid-October.

Overall, the sell-off since Thursday amounts to around $67 billion in lost market value, Reuters estimates. That compares with a total dividend payout from the sector of $41.6 billion in the second quarter of 2014, according to data from Henderson Global Investors.

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