The Beach Energy Ltd (ASX: BPT) share price rocketed 5.5% higher on the ASX yesterday as global oil prices rebounded on concerns of the impact that Libyan conflict could have on supply.
Why did the oil price surge higher?
Oil prices reached 5-month highs as the conflict in Libya intensifies and has started to put pressure on global oil supply, supporting higher pricing.
The global crude benchmark, Brent crude, has seen futures push to $71.34 per barrel while West Texas Instruments (WTI) has also seen support from the tighter supply.
Also supporting higher crude futures was Russia's indications that it wants to increase oil output when it meets with OPEC in June. The oil cartel, led by Saudi Arabia, has pushed for supply cuts that have seen crude prices bounce 30% this year as geopolitical factors in Venezuela and Libya have also aided the rebound.
Why did the Beach Energy share price soar higher?
As a leading Australian oil and gas exploration company, Beach has seen its share price rally more than 65% in 2019 on the back of the OPEC-led supply cuts and higher prices which have supported profitability.
The company, alongside fellow energy giants AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG), has been buoyed by the supply-side factors in domestic gas which have been sustained at record highs amid a shortage of supply.
The Energy sector performed strongly on the ASX in Q1 2019 and I would expect to see this run be sustained with the Australian Federal Election looming in May and no sign of a drastic overhaul of the Energy sector before year-end.
So is Beach in the Buy basket?
A sustained rebound in global oil prices on the back of supply cuts from OPEC has also helped push Beach to be one of the top S&P/ASX200 Index (ASX: XJO) performers so this year.
The oil and gas industry remains at the mercy of government energy policy (or lack thereof) and the big share price moves are likely to come in the second half of the year with a new government and the release of its full-year results in August.
For those looking for something a little edgier 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.
