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.

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)

FBS Analyst Team

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What is the forecast for oil in 2022?