Following on from our look at the Australian banks on Tuesday and the overnight surge by commodities this morning we’ve moved onto arguably one of our favourite sectors for early 2022 – the Energy Sector. Its nothing new that we like these names into 2022 but as we start a new year it’s important that subscribers are across our thinking month to month – we’ve already seen strong gains this week by Asian tech stocks illustrate how quickly sectors can come back into vogue i.e. in line with our elevated volatility call for the coming year.
Overnight crude oil rallied over 1% to challenge its 8-year high, a breakout which we believe is purely a matter of time with a sugar hit as Omicron comes under the control the most likely catalyst – we can see 15% upside this quarter. The important supply / demand backdrop shows inventories well below their pre-COVID 5-year range and they continue to be drawn down, clearly an early positive to start the year. The markets focusing on increased supply from OPEC and Shale into 2022/23 but history tells us this often disappoints and additional supply forecasts are probably in the optimistic corner i.e. energy markets are in a tight position with upside risks.
MM remains bullish crude oil
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