Energy stocks once again outperformed the rest of the market as oil and gas prices remain elevated due to inflation; Despite ongoing risks to tight global supply such as Russia’s invasion of Ukraine, some experts are now predicting that prices will decline by next year.
Energy prices have been surging in recent months: Demand remains high but supply has been tight ever since the West imposed sanctions on Russian oil after the country’s invasion of Ukraine in late February.
Despite their first weekly loss in over a month last Friday, oil prices jumped again on Tuesday: The price of US benchmark West Texas Intermediate sits at nearly $111 per barrel, while international benchmark Brent crude trades at more than $114 per barrel.
Major energy companies were among the best-performing stocks on Tuesday as the market rebounded from its worst week since March 2020, with the Dow gaining over 600 points in a relief rally.
Shares of Diamondback Energy rose 8% and Exxon Mobil by over 6%, while the likes of Halliburton, ConocoPhillips and Phillips 66 all rose by 5% or more.
Energy prices are down slightly compared to earlier this month (oil topped $120 per barrel two weeks ago), with some experts now predicting that prices may have peaked and could be set to moderate by early next year.
“Any country that is going to sanction Russian oil has likely now done so, and global oil producers have a strong profit motive to produce more, which they have announced they will do,” argues Moody’s Analytics chief economist Mark Zandi in a recent note.