Commodity prices across the board have surged in recent months, and energy commodities are no exception. Crude oil, thermal coal and liquified natural gas (LNG) have pushed higher, but ASX energy shares seem to be lagging behind.
Energy commodities bouncing back
Brent crude oil has staged a significant recovery to the US$52 per barrel level. This compares to being range bound around the US$40 mark since June 2020.
Thermal coal prices have increased over 50% during the December 2020 quarter, brought on by China ramping up imports on non-Australian thermal coal.
LNG prices have also surged to a six-year high of around US$15 per million British thermal units (MMbtu), from US$2/MMbtu in mid-2020.
A number of supply-demand, weather and political forces continue to work in favour of sturdy energy prices. Since March 2020, key energy producers including OPEC+ and Glencore have focused on managing supply and curbing greenfield and expansion projects.
More recently, a number of regional economies have also emerged from COVID-19-related lockdowns, which could help demand-side fundamentals.
Bell Potter upgrades ASX energy shares
Bell Potter reiterated buy recommendations for a series of ASX energy shares on 7 January 2021.
Beach Energy Ltd (ASX: BPT) had a share price target of $2.29, or an 19% upside to its closing price on Friday of $1.92.
The Cooper Energy Ltd (ASX: COE) share price target was 47 cents. This represents an upside of 17.5% compared to its closing price last week of 40 cents.
Finally, Senex Energy Ltd (ASX: SXY) also received a buy recommendation with a price target of 40 cents. The Senex share price closed at 33 cents last week.
These companies received buy recommendations on the basis that they each had uncontracted medium- to long-term production and are positioned to expand their existing assets to meet increased demand.
Other preferred ASX energy shares that received speculative buy ratings from Bell Potter included Byron Energy Ltd (ASX: BYE) with a price target of 42 cents, Comet Ridge Ltd (ASX: COI) with a 17 cent price target and Blue Energy Limited (ASX: BLU) with a 17 cent price target as well. These companies are far more speculative in nature, with market capitalisations of less than $200 million.
