Oil price performing well
The strength in crude oil prices this year has been supportive of energy stocks. Demand for oil has been robust as transportation needs in emerging markets have been increasing and this could persist for longer. Oil producers and Opec+ have been disciplined in their output, curtailing global supply.
The global energy equities sector offers some interesting opportunities for investors. The sector, which comprises mainly oil and gas producers, refiners and related services companies, has done well this year, rising over 10% as of end-April and comfortably outperforming global equities.
Although momentum has softened in recent weeks, we continue to believe the sector can outperform the market benchmark over the next 6-12 months. In the shorter term, we believe Europe’s energy sector offers a relatively more attractive buying opportunity today as it has lagged its counterparts in the US and China year-to-date. Also, investor positioning appears less stretched in Europe.
