Energy Stocks Are Poised To Rally Into 2023

Note to subscribers: This article was meant for publication yesterday as Substack was down during the day.

Following up on our two-part article on how oil speculators are screwing the pooch, I think energy equities are poised to do well going into 2023. 

One reason in particular that stands out is the fact that energy equities have withstood the oil sell-off far better than people expected. For those of you that have invested in energy since 2017, you may recall that there were many periods in time when energy equities failed to rally with the price of oil. And for subscribers adventurous enough, you can scroll through our archive back to 2017 when we wrote numerous articles on this topic.

Looking at the 2nd half of this year, the opposite phenomenon occurred. Energy equities have staged a massive outperformance against oil.

Since the start of the 2nd half, WTI is down ~30%, while energy equities are up. Many commentators have attributed this divergence as an indication that energy equities are overvalued, our experience tells us that this is a big signal change in the way investors are perceiving energy equities.

Not only do we think this momentum carries forward into 2023, but we also believe this is one of the definitive signals we can rely on to know if we are in a structural bull market or not.