- During the quarter investors found energy stocks; for the first time since 2011 the sector is trading above fair value, at 1.02 times. Higher oil and gas prices and rising production among U.S. independents are largely responsible for the revaluation.
- Oil prices strengthened as geopolitical concerns in Libya, Nigeria, Iraq, Iran, and Ukraine threatened supplies. Outside of the North America, crude oil supply growth has remained anemic, but rising U.S. tight oil production has freed up barrels for other nations, counteracting some of the supply concerns.
- A cold winter in the U.S. sent natural gas prices significantly higher, and record gas storage additions have done little to rein in prices. That said U.S. natural gas prices remain below our estimate of marginal cost and near the low end on the global supply curve, supporting calls for increased approvals of LNG projects.
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Jason Stevens does not own shares in any of the securities mentioned above. Find out about Morningstar’s