Why is the Beach Energy share price having such a stellar session?

The price target of Beach Energy's shares were given a 10% boost this morning by a Citi analyst, amid other developments.

| More on:
A woman wearing a backpack leaps for joy on the beach.

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

Key points

  • Energy shares are on the rebound this afternoon
  • The demand for gas is set to increase amid geopolitical tensions
  • The United States also plans to replenish its strategic petroleum reserves sometime after the next financial year

The Beach Energy Ltd (ASX: BPT) share price is up 4.09% today. And it's not just this company recovering well after yesterday's bloodbath.

Investors may be pleased that ASX energy shares are engulfed in a sea of green this afternoon.

The S&P/ASX 200 Energy Index (ASX: XEJ) is up 3.82% around lunchtime on Thursday.

Meanwhile, many of Beach Energy's peers are more buoyant than yesterday.

New Hope Corporation Limited (ASX: NHC) is up the most at a 5.46% gain, while Paladin Energy Ltd (ASX: PDN) and Viva Energy Group Ltd (ASX: VEA) are up 2.79% and 2.19%, respectively.

So why are energy shares rallying now after posting such a dismal result yesterday? Let's investigate.

Citi upgrades Beach Energy price target, oil and gas outlook improves

Beach Energy's share price target was upgraded this morning, as reported by The Australian.

Citi analyst Paul McTaggart bumped Beach Energy's price target by 2% to $1.88. That gives an appreciable upside of 10.58% for the company's shares at the time of writing.

McTaggart's thesis on the upgrade for Beach and that of other energy shares comes amid a continuing energy crisis, with an escalation being Russia's indefinite closing of the Nord Stream 1 gas pipeline on 2 September.

McTaggart said:

Due to fuel switching, impacts of high European natural gas and power prices have reverberated across the entire energy sector globally. Politically, Russia and the West could be in a tit-for-tat spiral that keeps Russian natural gas exports low. Weather also does not look to offer much relief to the market.

Meanwhile, the Department of Energy spokeswoman Charisma Troiano said it intends to replenish its Strategic Petroleum Reserve in the United States, but this won't occur sometime after 2023, as the Australian Financial Review reports.

Troiano also said that the department's speculated plans to buy oil once it reaches $80 per barrel are "inaccurate" and that there is no trigger price for the contract.

Troiano said:

The Department of Energy proposed an approach months ago to replenish the Strategic Petroleum Reserve, and that approach does not include any such trigger proposal. As we said then, we anticipate that replenishment would not occur until well into the future, likely after fiscal year 2023.

Beach Energy share price snapshot

Shares of the oil and gas exploration company currently trade for $1.72.

The Beach Energy share price is up 31% year to date. That's much better than the performance of the S&P/ASX 200 Index (ASX: XJO), which is down 9.7% over the same period.

The company's market capitalisation is $3.76 billion.

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

More on Energy Shares

A kid stretches up to reach the top of the ruler drawn on the wall behind.
Energy Shares

This ASX 200 share is down 40% in 2 months, an expert says it has significant potential

This fund manager has outlined why this stock has a positive future.

Read more »

oil and gas worker checks phone on site in front of oil and gas equipment
Energy Shares

Why ASX 200 energy shares are facing a plunging oil price in 2025

Just how low will the oil price go in 2025? Let’s find out.

Read more »

Man with a hand on his head looks at a red stock market chart showing a falling share price.
Share Market News

Why did the ASX 200 hit a six-month low last week?

There was turmoil on the share market with ASX 200 energy stocks the worst affected.

Read more »

Woman refuelling the gas tank at fuel pump, symbolising the Ampol share price.
Energy Shares

This ASX 200 share just hit a 52-week low, one expert thinks it's a great buy

UBS believes this stock could significantly drive returns.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Energy Shares

Why are Woodside shares sinking like stones today?

What is causing investors to hit the sell button today? Let's find out.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Energy Shares

'Material discount': Broker says this ASX 200 uranium stock can rise 100%!

Bell Potter thinks this stock is trading at a material discount and sees scope for it to double in value.

Read more »

Oil price going down.
Energy Shares

ASX 200 energy shares in retreat as oil price plunges on unexpected developments

ASX 200 energy stocks are catching headwinds on some unexpected fronts today.

Read more »

An oil worker assesses productivity at an oil rig as ASX 200 energy shares continue to rise.
Energy Shares

What happened with these ASX 200 energy shares in February?

For those keeping an eye on energy stocks this year, these ASX 200 shares moved in opposite directions in February. 

Read more »