Energy stocks poised to catch up with surging oil

PARIS (Reuters) – European oil shares have been tracking a sell-off in stock markets since May as surging crude failed to provide a boost to the sector, but a rally could be near if investors believe high crude prices are here to stay.

Market watchers argue that stock analysts, who take a bottom up approach, have been too conservative with their oil price estimates, leading investors to treat oil majors too harshly.

While a number of strategists now predict oil could soon pass $200 a barrel, the DJ Stoxx European energy index — home of Europe’s oil heavyweights — has lost 13 percent so far this year. It has been affected instead by concerns over production costs, reserve replacement issues, and the overall bearish sentiment in equities.

Reuters