The Beach Energy Ltd (ASX: BPT) share price surged 3.35% on the ASX yesterday as global oil prices rallied on news that Saudi Arabia may need to extend existing oil supply cuts.
What's driving the oil price higher?
The Organisation of the Petroleum Exporting Countries (OPEC) and its oil-producing partners decided to cancel a planned meeting for April which will leave existing supply cuts in place until at least June. These cuts have thus far pushed oil prices higher despite increasing trade tensions and Saudi Arabian Energy Minister Khalid al-Falih indicated that the cartel may need to leave the cuts in place until the end of 2019.
The most commonly-referenced oil benchmark, being Brent crude, rose 23 cents to $67.39 per barrel to approach last week's year-to-date high of $68.14. The other common oil benchmark, U.S. West Texas Intermediate (WTI) crude rose 14 cents to $58.66 per barrel in a sign of further supply-side shocks boosting the oil price higher.
While the technical environment for oil prices remains sound, concerns about global economic growth and the ongoing political crisis in Venezuela has threatened to push oil prices lower for much of the year.
As a leading Australian oil and gas exploration company, Beach has seen its share price surge more than 60% in 2019 alone on the back of lofty east coast gas prices at $9 – $10 per gigajoule (GJ) and the sustained global oil prices. The latest OPEC announcements and ongoing domestic gas supply shortages should see the Beach share price continue to be a top performer amongst the S&P/ASX200 Index (ASX: XJO).
So is Beach in the Buy basket?
The Beach share price has been on the tear in 2019 and has been a strong outperformer amongst its domestic peers, including the likes of Yancoal Australia Ltd (ASX: YAL) and Santos Ltd (ASX: STO).
Beach's share price is currently trading at a record-high $2.16 per share, which has exceeded the $2.11 mark set in late September 2018 after it sold its 40% interest in Victorian Otway assets.
I think the technical environment remains supportive for Australian gas and Beach is one of the better picks within the sector in my view. The gas industry remains at the mercy of government energy policy (or lack thereof) and will surely see some volatility in the months before and after the May Federal Election.
For those who aren't willing to jump into the energy sector just yet, I'd be checking out these top growth shares that have been tipped as market beaters.
