The Santos Ltd (ASX: STO) share price is pushing higher again on Monday.
In afternoon trade, the energy producer’s shares are up 2.5% to $6.77.
This latest gain means the Santos share price is now up over 10% since this time last week.
Why is the Santos share price rising?
Investors have been bidding the Santos share price higher over the last few trading sessions for a couple of reasons.
Chief among them is rising oil prices. According to Bloomberg, on Friday the WTI crude oil price rose 0.7% to US$73.98 a barrel and the Brent crude oil price climbed 1.1% to US$78.05 a barrel. This means that oil prices rose over 3% during the week.
These gains were driven by solid demand and tighter supplies. The latter is being caused largely by a slower than expected restart to production in the Gulf of Mexico following Hurricane Ida.
What else is boosting the company’s shares?
Also giving the Santos share price a lift was a broker note out of UBS last week.
According to the note, the broker has retained its buy rating and lifted its price target on the company’s shares to $8.65.
Based on the current Santos share price, this implies potential upside of 28% over the next 12 months.
UBS made the move after lifting its crude oil forecasts for 2021 and 2022, which resulted in an increase to its earnings expectations for Santos.
The broker is now forecasting Brent crude to average US$67.50 a barrel in 2021 and US$68.50 a barrel in 2022. The latter is up 10% on previous forecasts. “The higher oil price reflects the market’s appetite to price in the recovery rather than a changed view of the physical market,” UBS said.
All in all, Santos remains the broker’s top pick at present. This is thanks largely to its attractive valuation and solid growth opportunities.