Australia's oil and gas companies are providing some much needed energy for the local market today following a strong rise in oil prices overnight.
West Texas Intermediate (WTI) crude rose more than 3% to be trading above US$49 a barrel while Brent crude, which is the global benchmark, surged more than 2% to be trading at nearly US$55.50 a barrel. The gains came as a result of concerns related to political instability in Yemen after a series of military airstrikes which could impact producers in the region, as reported by The Australian.
Senex Energy Ltd (ASX: SXY) was one of the biggest beneficiaries of the price rise with its shares gaining 3.1%. Santos Ltd (ASX: STO), Oil Search Limited (ASX: OSH) and AWE Limited (ASX: AWE) also jumped as a result, recording gains of 1.2%, 0.8% and 0.6% respectively.
Before you consider buying shares in Australia's energy stocks, however, you should be aware of the risks involved. There is still a massive oversupply of oil in the global marketplace, with further production increases expected. This is likely to push oil prices even lower than their current level which will negatively impact those companies operating within the sector.
Rather than taking an unnecessarily high level of risk, it could be worth exploring some of the market's safer and more compelling opportunities instead.
