Oil stocks will benefit from reopening of trade on Wall Street, says Chris Wood; Shell, Exxon, BP in focus

Chris Wood has said petroleum is the most suitable commodity to reopen trade as the vaccine rollout continues.

Jefferies’ global markets strategist Chris Wood has chosen oil stocks as his most preferred near-term trade as cyclical stocks continue to rally on Wall Street. “In the short term, if CREDIT and fear were to favor an area of ​​cyclical trading, it would be oil stocks,” the Global Head (equity strategy) said in his weekly newsletter. Since the start of the year, the S&P Energy index has risen 41%, outperforming the S&P 500 which managed to jump 14%. Oil prices have risen slightly as the outlook for crude oil demand improves with the deployment of vaccines around the world.

Oil stocks well placed in the short term

Chris Wood has said petroleum is the most suitable commodity to reopen trade as the vaccine rollout continues. Brent crude oil prices broke through the $ 70 mark on Wednesday morning as OPEC and its allies moved to ease restrictions as the outlook for demand improved with encouraging macroeconomic data from economies such as the United States. “A further rise in the price of oil, namely $ 80 a barrel or more, is also likely to intensify the fear of inflation which has already started,” added Chris Wood.

Stick to cyclical commodity trading

Commodities buzzed in global markets, recovering from their 2020 lows as the world moved closer to old normal. Steel prices rose, contributing to a significant recovery in steel inventories. “The view here remains firmly that investors should stick to pro-cyclical commodity trading, especially energy,” said Chris Wood.

Although China has signaled that it is in control of the surge in commodity prices, Chris Wood remains adamant. “This is despite Beijing’s recent understandable efforts to lower commodity prices, and despite fears that a successful resumption of the Iran 2015 nuclear deal will lead to increased supply in the global oil market. Indeed, both concerns should be used as opportunities to add to positions such as copper stocks and oil stocks, ”he added.

Oil stock performance monitoring

-Exxon Mobil Corporation shares are up 46% this year
– Despite some volatility along the way, Royal Dutch Shell is still trading 10% higher since the start of the year
-Chevron Corporation is up 26% so far in 2021
-BP Plc on NYSE has jumped 30% year-to-date
-United States Oil Fund, a listed ETF that tracks WTI crude oil is up 43% in 2021
-Occidental Petroleum Corporation has registered 63% returns since the start of the year

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Felix J. Dixon