Goldman lists 5 reasons why traders should load up on energy stocks following oil's historic plunge (XLE)

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Goldman lists 5 reasons why traders should load up on energy stocks following oil's historic plunge

thinks now is the time for investors to add exposure to energy stocks following oil's historic plunge into negative territory last week.Goldman thinks energy fundamentals have bottomed and sees potential for a lasting recovery in energy stocks depending on the pace of the rebound in demand for oil.

The main risk related to the call, according to the analysts, is a much longer-than-expected oil demand recovery, which could be exacerbated if the coronavirus pandemic lingers around longer than investors expect.1."Oil prices are at/below cash costs." WTI oil prices are below the $20 to $25 per barrel price that is often seen as"typical cash cost floors." Goldman thinks current low prices and even the negative oil prices seen last week are warranted due to the level of oversupply in oil markets. At the same time, these ultra-low prices should force a reduction in production, thus reducing supply and helping put a floor in oil prices.

 

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