What is behind the turnaround in energy?

ENERGY

Jonathan Waghorn, co-manager of the Guinness Global Energy fund, says oil prices have fluctuated over the past 18 months, but now could be an interesting entry point for investors.

After three years of underperformance, energy equities performed strongly in the first half of this year, up 14.3% versus 6.5% by the MSCI World. This is partly due to the strength in spot oil prices.  More importantly, however, are long-term oil price expectations, which have improved significantly: the four-year Brent forward price has risen this year by 9% to $99 at the end of June 2014 (see graph below). The rise and rapid expansion of ISIS in the Middle East has also brought the sector into focus in recent months. Although it is unlikely to affect the near-term oil supply; the st...