There weren’t many safe havens in 2022 but energy was one of them.
Oil finished today with a flurry, gaining $2.03 to $80.43 for the first annual close above $80 since 2013. It was far from a smooth ride though as oil surged to $130.50 on fears that Russian supplies would be cut off before falling all the way back to $70.08 earlier this month.
Further out the curve, prices have moved up and that’s made energy the best sector in the S&P 500.
The volatility on the yearly chart since 2020 is staggering.
oil yearly
Going into next year, many are betting that slowing growth saps demand but others see China reopening eventually spurring bids for barrels.
On the supply side, Russia is starting to lose some barrels and the SPR sales are now set to reverse. Oil companies have shown discipline so far and are suffering from cost inflation but there’s still money to be made by drilling.