Why this Goldman Sachs forecast could see these 3 ASX energy shares lift off

If the UBS and Goldman Sachs analysts got these forecasts right, these 3 ASX energy shares could see their share prices lift off.

| More on:
oil drill in sunset

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Like it or not, fossil fuels are going to be powering much of our energy needs for decades to come. 

Despite the rise of electric vehicles, that remains particularly true for many of our cars and trucks. Not to mention boats, planes and… well, you get the idea. 

Yes, the price of oil crashed in 2020. With demand evaporating as COVID-19 travel restrictions idled planes, boats and cars, Brent crude oil tumbled to US$19.33 a barrel on 21 April last year.

Since then energy prices have been steadily regaining lost ground. Brent crude currently is worth US$57.67 per barrel. That's up 54% (from US$37.46 per barrel) just since 30 October.

Part of the price rise is due to increased demand as parts of the world relaxing some of the stricter virus restrictions. Reduced supply due to output cuts from OPEC members has also helped lift the oil price.

According to an analysts at UBS and Goldman Sachs, oil prices are likely to head still higher from here.

As Bloomberg reports:

UBS forecast that Brent crude would reach $US63 a barrel by the second half of this year and $US65 by the first quarter of 2022. Goldman Sachs said it expected the benchmark to reach $US65 by July.

Those forecasts would mean another 13% hike in the price of Brent crude. So what does that mean for ASX energy shares? 

3 leading ASX energy shares that stand to benefit

The ASX has no shortage of energy shares. While many factors determine how their share prices move, they're all likely to perform better when they receive more for the oil and gas they pump from the ground.

We'll stick to 3 of the biggest energy stocks trading on the S&P/ASX 200 Index (ASX: XJO).

First, there's Oil Search Ltd (ASX: OSH), with a market cap of $8.3 billion. Since oil prices hit a low on 21 April last year, the Oil Search share price is up 62%. Oil Search pays an annual dividend yield of 1.7%, unfranked.

Next, we have Santos Ltd (ASX: STO), with a market cap of $14 billion. Santos' share price has gained 70% since Brent bottomed on 21 April. Santos pays an annual dividend yield of 1.6%, fully franked.

Third, there's Woodside Petroleum Limited (ASX: WPL), with a market cap of $24 billion. Since 21 April's rock bottom oil prices, the Woodside share price is up 27%. Woodside pays an annual dividend yield of 4.8%, fully franked.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Man jumps for joy in front of a background of a rising stocks graphic.
Broker Notes

These ASX 200 shares could rise 20% to 50%

Looking for big returns? Brokers think these shares could do the job.

Read more »

asx share price represented by cartoon letters spelling the word FOMO
Share Market News

What did Macquarie's "FOMO Meter" reveal about the stock market in May?

Is the market getting frothy or is there still room to climb?

Read more »

Market up or down
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors had a rough end to the week...

Read more »

Man in an office celebrates at he crosses a finish line before his colleagues.
Share Gainers

4 ASX 200 shares racing ahead of the benchmark this week

ASX investors sent these four stocks soaring 12% to 18% this week. But why?

Read more »

A young man sits at his desk working on his laptop with a big smile on his face.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Dateline, DroneShield, Ora Banda, and Pilbara Minerals shares are dropping today

These shares are ending the week in the red. But why?

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why BHP, Coronado Global, EBR Systems, and Whitehaven Coal shares are pushing higher today

These shares are ending the week on a positive note. Let's find out why.

Read more »

man thinking about whether to invest in bitcoin
Broker Notes

Why Macquarie expects this ASX 200 dividend stock to keep outperforming

Macquarie has tipped this ASX 200 dividend stock to outperform. Let’s find out why.

Read more »