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Good News For Energy Investors Even As Oil Prices Fall

Looking back on 2022 in energy, there is one phrase that I, and I’m sure many of you as energy investors, find comes to mind more than any other…I told you so! After a decade or so of underperformance that was sometimes for understandable reasons but sometimes had no detectable basis in logic, energy stocks got their revenge this year. XLE, the biggest energy sector ETF, opened on January 3rd, the first trading day of 2022, at 55.55. That was the lowest traded price of the entire year, with shares in the fund hitting a high of 94.71 in November.

If you are here, reading an article in a newsletter dedicated to energy investing, you probably don’t need me to tell you that, but it bears repeating, especially following a big year in 2021, and the way it was achieved tells us a lot about what to expect going forward.

The strength in energy stocks in the first part of the year made sense in a conventional way, as it came as crude soared. The Russian invasion of Ukraine impacted the supply of oil and, with global growth and therefore the demand outlook relatively strong, oil prices climbed to where crude hit 130.5 in early March, its highest level since July of 2008. It was what happened after that high was hit, though, that set the tone for the rest of the year.

With President Biden releasing massive amounts of oil from the country’s strategic reserves and Covid beginning to re-emerge in China, WTI futures gave up a lot of…



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