Shares of Beach Energy Ltd (ASX: BPT) have rallied in a sawtooth-like fashion since December 2021.
This year to date, the ASX energy player is up 32%, outpacing pretty much all other pockets of the market during that time.
What does FY23 hold for Beach Energy shares?
Energy markets have cooled in recent months. Brent Crude now trades back in line with April lows at US$100/barrel, signalling a wind back in the oil and gas trade.
Meanwhile, natural gas markets continue to run hot, with European gas contracts in particular locking in triple-digit gains.
As such, energy shares such as Beach continue to book substantial gains into the new financial year.
The question now turns to where Brent Crude and natural gas markets might head next, considering the short-term pullback.
Earlier in July, broker UBS revised its forecasts for oil and gas. It projects crude prices will retain support from investors amid a disrupted global oil supply.
It also projects an average 40% increase in LNG prices to North Asia by 2026, propelled by declining gas exports from Russia to Europe.
UBS says that this more dynamic pricing environment is set to provide a significant cash injection to Australian exploration and production companies.
As such, it raised its price target on Beach to $2.05 per share on a buy rating, signalling a 23% return potential should the broker prove correct.
Oil and gas markets
The debate on oil and gas markets is contentious and has players on both sides of the argument.
"Demand concerns continue to spook the oil market," Refinifiv Oil Research wrote last week. It added:
The OPEC also came out with an outlook for global oil demand and economic growth, pegging the oil demand growth for 2023 at 2.7 million bpd, which is lower than the estimate of 3.36 million bpd for 2022, but still an optimistic forecast.
Despite the debate on forecasts and such, broker sentiment is still positive on the share.
Beach Energy is rated a buy from 11 of the 15 brokers covering its shares, according to Refinitiv Eikon data.
The consensus price target from this list is $1.97 per share, in line with August 2021 analyst projections, per Refinitiv.
Beach Energy shares are up 29% in the past 12 months.
