Australia's energy sector is providing plenty of excitement today after a strong rise in oil prices overnight.
Although there are still huge concerns regarding the United States' growing pile of crude inventory, oil prices managed to rise strongly thanks to comments made by the US Federal Reserve. Following its two-day policy-making meeting, the Fed comforted the markets by suggesting it would not increase interest rates as quickly as what the market had been expecting. As a result, the US dollar fell heavily against other major currencies.
Given that oil is traded in US dollars, a weaker currency makes it more affordable to foreign buyers which could help ease the nation's growing inventory problem. The price of West Texas Intermediate (WTI) crude surged 2.8% to US$44.66 a barrel while Brent crude rose roughly 5% to US$55.91 a barrel, according to The Australian Financial Review.
Here's how Australia's energy producers are performing as a result:
- Senex Energy Ltd (ASX: SXY) is up 5.1%
- Santos Ltd (ASX: STO) up 1.8%
- Woodside Petroleum Limited (ASX: WPL) up 1.4%
- BHP Billiton Limited (ASX: BHP) up 1.6%
- Origin Energy Ltd (ASX: ORG) up 2.4%
- Sundance Energy Australia Ltd (ASX: SEA) up 3.1%
Today's gains will certainly come as a relief for energy investors whose shares have come under significant selling pressure in recent weeks. Indeed, there are still plenty of risks facing the sector and investors may want to look elsewhere for safer returns.
