Since the beginning of the year, the stock of ExxonMobil (XOM(has lost significant ground, down near 10% on the year. This is in contrast to British Petroleum (BP), which is near breakeven, and Shell (RDS-A), which is up close to 10% year to date. While the stock sector beta is a challenge to calculate based on these three diverging stocks, with oil trading near $50 per barrel, Moody’s analysis points to slowing if steady oil and gas sector EBITDA growth in 2018 after strong year over year growth basis June. Even with oil and gas sector earnings stabilizing, however, there is a slight caution flag apparent, leaving investors to wonder if the energy sector will be a drag on overall stock prices.

Net earnings growth in the oil and gas sector is expected to slow to the mid-single digits, according to a September 25 report from Moody’s. Analysts Elena Nadtotchi, Peter Speer, Steven Wood and Anke Richter pointed to an average price of oil near $50 in 2018 – near where it is trading at present.

The generally stable if muted forward-looking outlook is due to Moody’s expectation of strength in downstream operations in “resilient refining margins” and anticipated strong performance in trading and chemical divisions. “We have assumed that downstream earnings will remain flat in our 2018 forecast for the sector as a whole. On a company-specific basis, we have factored in an increased focus on delivering growth in downstream earnings through investment in new chemicals capacity for Shell and BP, and through further efficiency gains for BP and Repsol.” (REPYF)

The lackluster if stable price movement in a key underlying asset, oil, is what is expected to keep earnings “broadly flat.” Moody’s had been positive on the oil and gas sector since 2017.