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.
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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.
