High Oil Prices Don’t Make Europe Energy Stocks Attractive to All


Europe’s energy shares have hit seven-month highs, thanks to crude oil prices jumping to a 2023 peak and natural gas prices rising almost 40% in two months, but not all investors view this as the perfect opportunity to buy.

The STOXX 600 European oil and gas index (.SXEP) is at its highest since mid-February, having gained around 13.5% in the past two months. In the same period, benchmark Brent crude has risen 18% and European natural gas prices have gained 50%.

Oil and gas stocks tend not to outpace gains in the cost of crude, as integrated producers that both extract and refine oil take a hit to their margins in an environment of high prices.

Yet the energy-specific index has outpaced the broader STOXX 600 (.STOXX), which has risen just 0.1%, in part because of brewing concerns about the impact of higher oil prices on inflation, which may require central bankers to fight harder against rising prices.

Source : Reuters