Benchmark North American oil prices are back over $70 per barrel. That’s a level few outside of our Energy and Income Advisor investment community expected at the beginning of 2021. Natural gas, meanwhile, has pushed to its highest price since December 2018, well over $4 per million British Thermal Units.
Energy stocks, however, remain largely unloved. In fact, the S&P Energy Index is still 11 percent below its late June high, before the combination of profit-taking, concerns about a new coronavirus wave and OPEC+ output increases took the wind out of its sails.
Energy stocks’ underperformance of the commodities demonstrates once again the lack of investor conviction in the staying power of the sector rally that began in early November 2020. In fact, the S&P Energy Index currently trades almost 20 percent lower than it did in early January 2020 prior to pandemic, when benchmark oil sold for $10 a barrel less than it does now and gas was almost $2 lower.
Sector stocks’ discount is understandable given what happened to oil and gas price during the previous decade, most notably crude’s decline from $70 plus a barrel in late 2018 to sub-zero in April 2020. But as we pointed out again in the previous issue, the world for energy has changed dramatically since the pandemic.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Jun. 29, 2022