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Energy-related stocks and ETFs had a blockbuster 2022 performance, but can that trend continue into 2023? BlackRock thinks it can, as the world’s largest asset manager remains bullish on the outlook for energy over the long term.
“Despite near-term challenges, we remain constructive on energy stocks thanks to constraints on supply and attractive valuations,” the asset manager said in a research note put out on Tuesday.
From a near-term vantagepoint, energy names have been confronted by an abnormally warm winter in Europe. At the same time, central banks have stayed focused on bringing down inflation, a policy stance that will likely stunt demand.
The financial institution also outlined that crude futures have come down in preparation of a slowing global economy. Meanwhile, energy earnings over the course of 2023 will need to compete with 2022’s explosive results.
“However, in the medium to longer term, we remain constructive on energy stocks given structural underinvestment in the sector and imbalanced supply-demand dynamics.”
Oil prices (CL1:COM) currently hover near $78.50 a barrel and has not closed above its 100-day moving average since July 1st. See below a 6-month chart of oil prices including the commodities 100-day moving average:
For investors who share a similar longer-term outlook for oil, here are some potential oil & energy ETFs: (NYSEARCA:USO), (NYSEARCA:UCO), (DBO), (USL), (LE), (NYSEARCA:VDE), (AMLP), (XOP), (IXC), (IEO), (DRLL), (XES), (IEZ), (PXE), (OIH), (ERX), and (GUSH).
For further insight, see BlackRock’s complete 2023 energy outlook.