The Woodside Energy Group Ltd (ASX: WDS) share price is tracing higher in afternoon trade on Friday.
At the time of writing, the energy giant is trading almost 3% higher at $31.09 apiece on no news.
Noteworthy, however, is a bullish note out of Swiss investment bank UBS in which the broker has updated its rating on Woodside to buy.
Meanwhile, Brent Crude oil lifted overnight but looks set to finish lower on Friday. It now trades at US$104 per barrel.
The Woodside share price plus the price of natural gas and Brent Crude for the past year are plotted on the chart below.
Image source: Getty Images
Woodside share price rallies amid gas jump, broker note
Brent Crude lifted on 7 July but found a base at US$104 per barrel today and is trading sideways.
It's natural gas futures that are stealing the energy show today, however.
US natural gas is up 13% in the last 2 sessions, whereas European and UK gas contracts are up 131% and 130% in the past month respectively.
A team of UBS analysts led by James Wong have lifted the rating on Woodside to a buy in a note today. The UBS team made the call after revising spot forecasts for LNG in North Asia up by 40%.
It cites as reasons behind its decision a faster drop in European imports of Russian gas from 2022–2026, among other difficulties Europe faces in its gas storage.
The Europe situation is important, UBS says, due to the "direct correlation between European gas hub prices and North Asian spot LNG prices".
"[This] provides a material cash injection to E&P companies with high spot LNG exposure such as Woodside," it added.
The broker reckons Woodside's dividend yield would lift to around 9% if around 20% of the company's produced LNG is sold at forecasted spot prices.
In rating the Woodside share price a buy, UBS lifted its price target to $34.25 per share, implying around 10% return potential at current market prices.
The Woodside share price has gained 32% in the past 12 months and is trading 42% higher this year to date.
