If the UBS and Goldman Sachs analysts got these forecasts right, these 3 ASX energy shares could see their share prices lift off.
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Like it or not, fossil fuels are going to be powering much of our energy needs for decades to come.
Despite the rise of electric vehicles, that remains particularly true for many of our cars and trucks. Not to mention boats, planes and… well, you get the idea.
Yes, the price of oil crashed in 2020. With demand evaporating as COVID-19 travel restrictions idled planes, boats and cars, Brent crude oil tumbled to US$19.33 a barrel on 21 April last year.
Since then energy prices have been steadily regaining lost ground. Brent crude currently is worth US$57.67 per barrel. That’s up 54% (from US$37.46 per barrel) just since 30 October.
Part of the price rise is due to increased demand as parts of the world relaxing some of the stricter virus restrictions. Reduced supply due to output cuts from OPEC members has also helped lift the oil price.
According to an analysts at UBS and Goldman Sachs, oil prices are likely to head still higher from here.
As Bloomberg reports:
UBS forecast that Brent crude would reach $US63 a barrel by the second half of this year and $US65 by the first quarter of 2022. Goldman Sachs said it expected the benchmark to reach $US65 by July.
Those forecasts would mean another 13% hike in the price of Brent crude. So what does that mean for ASX energy shares?
3 leading ASX energy shares that stand to benefit
The ASX has no shortage of energy shares. While many factors determine how their share prices move, they’re all likely to perform better when they receive more for the oil and gas they pump from the ground.
We’ll stick to 3 of the biggest energy stocks trading on the S&P/ASX 200 Index (ASX: XJO).
First, there’s Oil Search Ltd (ASX: OSH), with a market cap of $8.3 billion. Since oil prices hit a low on 21 April last year, the Oil Search share price is up 62%. Oil Search pays an annual dividend yield of 1.7%, unfranked.
Next, we have Santos Ltd (ASX: STO), with a market cap of $14 billion. Santos’ share price has gained 70% since Brent bottomed on 21 April. Santos pays an annual dividend yield of 1.6%, fully franked.
Third, there’s Woodside Petroleum Limited (ASX: WPL), with a market cap of $24 billion. Since 21 April’s rock bottom oil prices, the Woodside share price is up 27%. Woodside pays an annual dividend yield of 4.8%, fully franked.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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