S&P/ASX 200 Index (ASX: XJO) energy shares have come roaring back from their early pandemic lows.
Battered by international and domestic travel restrictions, which sent crude oil prices plummeting into the basement in March and April last year, energy shares joined travel shares for the ignominious honour of posting some of the steepest falls on the ASX 200.
You may recall that less than a year ago, on 27 April 2020, a barrel of Brent crude oil was worth US$19.99.
Today that same barrel is selling for US$66.54. An increase of 232%.
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The bullish outlook for crude oil prices
While COVID-19 remains a wild card in the outlook for crude oil demand and prices, a growing number of analysts, including JP Morgan, are bullish on the short-term outlook for oil.
Edward Moya, senior market analyst at Oanda Corp shares that outlook. Moya said (quoted by Bloomberg), "There's going to be tremendous pent-up demand for crude. There are some areas that are seeing cases trend higher, but the restrictions are going to be short-lived as vaccines get distributed."
Bill O'Grady is the executive vice president at Confluence Investment Management in St. Louis. Commenting on his outlook for the crude market, O'Grady said, "There's always bearish factors in any market, but now that we've broke out to the upside, it likely means we're going to retest the old highs, if not go through them."
Two leading ASX 200 energy shares
Two of the top oil and gas shares on the ASX 200 are Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL).
At the current price of $7.18 per share, Santos has a market cap of $14.9 billion. The company trades on a price to earnings (P/E) ratio of 12.8 times. Up 2% in late afternoon trading today, the Santos share price is up 69% over the past 12 months. That compares to a gain of 30% on the ASX 200.
Woodside, up just under 1% today, is trading for $24.36 per share, giving it a market cap of $23.5 billion. Woodside shares have gained 16% over the past 12 months and 6% year-to-date.
