The Beach Energy Ltd (ASX: BPT) share price has surged more than 3.5% on the ASX this morning after an uptick in global oil prices amid reports of strong US demand for crude oil.
What caused this morning's share price drop?
According to a report from Reuters, hedge funds have been buying up on oil again in a sign that they might be seeing a more positive for the global economy.
Both Brent crude and US West Texas Intermediate (WTI) prices have risen marginally today as OPEC supply cuts and expectations of lower US inventories outweighed recent concerns about slowing economic growth and potential recession signals.
What has pushed the Beach share price lower in the last few days?
Global oil prices have been steadily falling in recent days on fears of slowing economic growth and the ongoing US-China trade war, which has seen the Beach share price drop 5% of its gains in the last week alone.
As a leading Australian oil and gas exploration company, Beach has seen its share price surge more than 60% in 2019 as Brent crude has risen 25% higher on Saudi Arabian-led supply cuts from OPEC and the impact of US sanctions on Venezuela and Iran.
So is Beach in the Buy basket?
The oil and gas industry remains at the mercy of government energy policy (or lack thereof) and will surely see some volatility in the months before and after the May Federal Election.
This morning's announcement by Leigh Creek Energy Ltd (ASX: LCK) means it now has the largest P2 gas reserve on the east coast of Australia which presents some serious competition for Beach.
However, given the short supply story that has kept Australian prices at record highs, I think Beach's profitability should still remain intact until its full-year results release in August.
I don't think Beach's short-term share price struggles are over, but I do think the long-term outlook for the company remains sound.
For those looking for something a little more new-age than the Energy sector, this top-rated stock in a booming new-age industry could give you the edge as a growth investor in 2019.
