Over the past 10 years, the energy sector has underperformed the broader Australian share market by over 50% and is priced at relative levels similar to January 2016 when oil prices fell below US$30 per barrel.
Now Australian dollar oil prices are back above A$90 per barrel, but Australian oil and gas stock prices are nowhere near the levels reached the last time oil was trading at those levels.
We believe the energy sector is the most contrarian sector in the Australian market today.
In this short video interview with Livewire, Analyst Sudhir Kissun explains that despite concerns over the impact on oil demand from electric vehicles and stricter climate change regulations, we believe that oil prices are just too low today. He also discusses one of our portfolio’s largest exposures to energy, Oil Search, and our rationale for investing in the company.