The S&P/ASX 200 Index (ASX: XJO) is enjoying a day of modest gains so far this Monday. At the time of writing, the ASX 200 is up 0.29%. But two ASX 200 energy utility shares are performing far better.
Origin Energy Ltd (ASX: ORG) shares are currently outperforming the broader market. Origin shares have put on a robust 1.72% so far and are sitting at $6.215 each. That's not too far from the company's 52-week high of $6.37 that it hit just last week. After a lacklustre couple of years, Origin has really pumped the gas over the past year or so. Its 12-month gains now sit at around 43%, which includes an almost 19% rise over 2022 alone.
But that's nothing compared to the AGL Energy Ltd (ASX: AGL) share price.
AGL shares are presently enjoying gains that would make even Origin blush. AGL is currently up by an enthusiastic 4% so far today and is now asking $7.115 a share. Like Origin, AGL has had a very tough couple of years. Ever since hitting more than $27 a share back in 2017, AGL has been suffering a very long and protracted fall.
The company found a new multi-decade low of just $5.10 a share back in November. But since then, this energy retailer has also been enjoying a renaissance. At today's pricing, it is now up around 40% from those lows, although AGL still remains down by nearly 36% over the past 12 months.
So what is causing these two ASX energy utility shares to so comprehensively outperform the broader market today?
Image source: Getty Images
Are higher energy prices lifting AGL and Origin shares?
Well, we can't be certain. It doesn't appear these moves are related to any official news or announcements out of either company today. But there is something else going on that could be feeding investor sentiment. That is energy prices.
Since Origin and AGL are utility shares, generating and onselling energy services, they are fundamentally exposed to the cost of raw energy commodities such as oil, coal, and gas. And the cost of these commodities has been exploding in recent months. As recently as December, Brent crude oil was under US$70 a barrel. But today, it is well over US$90 a barrel. That might explain why both AGL and Origin shares have enjoyed such a healthy start to 2022.
But why is oil so hot right now? Well, the current tensions surrounding the energy-intensive states of Russia, Ukraine, and the United States seem to be pushing energy commodity prices through the roof. According to a recent report in the Australian Financial Review (AFR), "hedge funds say oil is on the cusp of hitting $US100 a barrel". Portfolio manager of the Tribeca Natural Resources Fund Ben Cleary told the AFR, "$US100 oil is almost consensus now… I think the bigger question is, how high can oil go?"
Expectations of such acute pricing pressure in the energy markets may well be why investors are rushing into ASX 200 energy utilities like Origin and AGL today.
