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Vaccine Rollout Drives Energy's Rise

But the sector's current tailwinds are likely unsustainable, so investors should prioritize high-quality businesses with stable balance sheets.

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Dave Meats: For the second quarter in a row, the Morningstar US Energy Index eclipsed the overall market, beating the aggregate index by over 28% in the first quarter. The ongoing rollout of COVID vaccinations is the primary driver, since the reopening of the global economy should eliminate the need for the stay-at-home orders and travel restrictions that have been suppressing crude demand in the last 12 months.

We still think global consumption will be back at 2019 levels within two years. Nonetheless, their offer has challenges. European countries are on the brink of extending lockdowns into April, given rising infections and the safety and effectiveness of the AstraZeneca vaccine, in particular, has been called into question in some parts of the world.

Dave Meats does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.