Whether or not you believe OPEC can defeat its history and agree and observe a production cut, there is still a case for energy stocks. The reasoning is that energy stock prices continue to hold a risk premium for future oil shocks. As the oil price stabilises, this risk premium should be removed – meaning energy shares can rise whether or not the oil price goes higher.
In previous chats about energy shares we’ve looked at the desirability of natural gas in a carbon constrained universe. Investors who are already full with Woodside and Oilsearch may dig deeper into the sector – and find Beach Energy (BPT). Alert readers will notice I’ve skipped over Santos. In my view their assets are old and poorly run. For Cooper Basin exposure, and a better oil/gas mix, I prefer Beach.
And by the look of the chart, so do traders. However the down trend line is drawn, it is clearly broken. Yesterday’s solid gain may see some investors waiting for a pullback to around 60 cents. However, the action can be construed as a break out, and BPT may not look back from this point.