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Energy Sector Outperformed the Broader Market

Energy Sector Outperformed the Broader Market

Information is not investment advice

Bloomberg reported that ‘the S&P 500 Energy Index has outperformed the broader S&P 500 by 21 percentage points so far this year, with the top-performing stock, Devon Energy Corp., gaining a whopping 167%’.

Now, energy stocks have outperformed the broader market for the first time since 2016! Moreover, analysts believe that this trend will continue despite the global shift to renewable energy resources.

“There’s a massive appetite to invest in it because it’s just spewing out cash right now,” said Rafi Tahmazian, whose energy producer-focused fund is up 91.2% year to date.

What is the forecast for oil in 2022?

As usually, opinions are divided. Some experts predict that oil prices may experience a correction. WTI oil (XTI/USD) is expected to drop to $66 per barrel by the end of the first half of 2022 and $65 per barrel by the year-end. Still, Tahmazian claimed energy companies could continue to be profitable with lower oil prices.

However, the OPEC+ alliance has upgraded the global oil demand forecast for the first quarter of 2022. The OPEC members believe that the omicron impact will be mild and short-lived. Indeed, the outlook for more robust demand in combination with the current supply limits can keep oil prices afloat.

Tech analysis

XBR/USD is moving inside the ascending channel. The key resistance level lies at $80.00. If crude oil manages to break above this level and close there, then oil has all chances to rally further to the October peak at $85.00. Support levels are at the intersection of the 50-week moving average and the lower trend line at $71.50 and $68.00.

XBRUSDWeekly.png

Energy stocks to trade with FBS

Royal Dutch Shell #RDSB

Linde Plc #LIN

Anglo American Plc #AAL

 

Energy trading instruments in FBS

XTI/USD (WTI oil)

XBR/USD (Brent oil)

XNG/USD (Natural Gas)

 

 

 

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Is the Oil Rally Over?

On Thursday, June 2, the Organization of the Petroleum Exporting Countries Plus (OPEC+) agreed to boost output by 648 000 barrels per day (bpd) in July and August…

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Yes, oil prices are burning right now, and inflation is getting hotter along with it worldwide. However, the oil's bullish momentum is under threat.

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Bulls Are Coming Back

The US dollar index rose to 105.40 after the Fed’s 75-basis-point key rate hike, while the stock and the crypto markets fell. However, during the past few days, investors and traders returned to risk assets as they expect inflation growth to slow. Moreover, Jerome Powell, the head of the Federal Reserve, announced the Fed might start cutting the key rate by 2024, which is the most evident hint of an upcoming market reversal.

What to trade on June 20-24?

Last week was shocking!  The US dollar gained more than 2% against other currencies ahead of the 75-basis points rate hike by the Federal Reserve on Wednesday but dropped after the announcement…

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