Bank of America predicts crude to surge almost 50% to $69 a barrel by June 2017
It’s no secret that when oil prices rise, energy stocks tag along for the ride.
That’s why energy stocks are up 14% this year, following oil’s 25% gain so far in 2016. Energy stocks are the second-best performer among the major market groups. Many investors even fear they’ve already missed the move.
But Bank of America Merrill Lynch came out with an even more bullish call this week, upgrading energy stocks to overweight. The bank predicted crude will surge almost 50% from current levels to $69 a barrel by next June, pushing energy stocks ahead of the rest of the market.
“The rotation into energy may still be in its infancy,” Savita Subramanian, equity and quant strategist at BofA, wrote in a report on Tuesday.
While some are skeptical about oil’s near-term prospects, BofA believes falling production combined with strong demand will create the biggest supply-demand deficit since 2011.
It’s no secret that when oil prices rise, energy stocks tag along for the ride.
That’s why energy stocks are up 14% this year, following oil’s 25% gain so far in 2016. Energy stocks are the second-best performer among the major market groups. Many investors even fear they’ve already missed the move.
But Bank of America Merrill Lynch came out with an even more bullish call this week, upgrading energy stocks to overweight. The bank predicted crude will surge almost 50% from current levels to $69 a barrel by next June, pushing energy stocks ahead of the rest of the market.
“The rotation into energy may still be in its infancy,” Savita Subramanian, equity and quant strategist at BofA, wrote in a report on Tuesday.
While some are skeptical about oil’s near-term prospects, BofA believes falling production combined with strong demand will create the biggest supply-demand deficit since 2011.
Of course, buying energy stocks remains risky. Much of the bullish thesis hinges on the future direction of oil prices — a notoriously difficult commodity to predict. Crude collapsed from above $100 a barrel in mid-2014 to just $26 in February, a crash few saw coming. And then a dramatic rebound to $50 a barrel in May proved to be short-lived.
