Bank of America: Energy Stocks to Go Up By 40%?

According to the Bank of America, Oil prices are bound to go higher in the near future.

However, it’s the investors who will miss out on a golden opportunity to get some profits out of it.

Bank of America says that will happen because most of the portfolios have very less exposure to the energy sector.

Ever since the vaccination drives have started rolling out in the US and all around the globe, people have started to go out for work.

So, the oil demand is quite natural to grow.

And because of the very same reason, by the end of this year, you can expect the share prices of West Texas Intermediate crude and Brent crude to go up by 40 percent.

How OPEC Managed the 2020 Crisis?

Back in 2020, when the covid-19 pandemic was at its peak, the energy sector collapsed as oil prices reached negative territory to drop by almost 40%.

So, to handle the situation, OPEC and its allies decided to address the oil stockpiling by cutting up the oil production.


WTI & Brent Crude 2021 Performance

Now in 2021 if you compare the energy sector to the previous year then it has gained 45%.

Over the past 12 months, WTI and Brent crude has topped up the charts with gains of 95% and 90% respectively.

Today Brent crude oil is trading at $72.62/barrel which is $63.5 up from the disastrous low of $9.12/barrel last year

On the other hand, WTI, which traded at the lowest of $11.26, is now trading at around $70/barrel.

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In a note published by the head of US equity strategy and quantitative strategy at BofA Securities, Savita Subramanian wrote, “If Energy doubled again, and all other sectors saw average returns, investors with no Energy exposure would sacrifice a full 3 percentage points of alpha. Therefore, losing out on 3% would be more than obliterating relative gains of 0.59% this year.”

That’s all for now. Now, tell me, does your portfolio includes Energy Sector Shares? If not, would you add them?

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