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Our Outlook for the Energy Sector

We see fewer buying opportunities after a swift spring rally in energy stocks.

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Our long-term outlooks--and consequently, our price assumptions--for oil, natural gas, and coal haven't changed during the second quarter. After improving considerably in the first quarter, the short-term outlook for North American natural-gas producers has remained bright. The short-term outlook for oil has also improved. In mid-June, OPEC announced that it saw no need to boost output despite prices rising into the mid- to high-$60s per barrel. Domestic refiners also profited enormously during the second quarter. Nationwide gasoline prices hit an all-time nominal high in May due to unexpected refinery outages across the country, limited imports, and strong demand. Prices began to subside after Memorial Day as some capacity was restored, but they will likely remain high until after the summer driving season ends around Labor Day. After that, we'd expect gasoline prices to retreat.

Eric Chenoweth does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.