A blazing U.S. stock market rally left shares of energy companies behind in the first six months of 2023 as faltering global growth sapped expectations of oil demand. Some contrarian investors are betting a second half rebound may be in the works.
has lost nearly 10% this year, making it the index’s worst performing sector. The benchmark S&P 500, by comparison, is up 14%.
"We don't have a recession as our base-case scenario in the U.S., so we think there is scope for the laggards to catch up," said David Lefkowitz, senior equity strategist at UBS Wealth Management. "Energy is at the top of that list." Analysts at TD Securities said oil production cuts from Saudi Arabia and supply reductions from OPEC+ "are likely to more than offset the surplus accumulated in the first half of 2023,” lifting the price of U.S. West Texas Intermediate to $90 per barrel. That would be sharply higher than Tuesday's settlement price of $67.70 for WTI, with global benchmark Brent settling at $72.26.
Betting on a rebound in energy stocks remains very much a contrarian play in a market whose march higher has been led by a handful of giant tech and growth stocks.
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