Energy Is Now Europe’s Top-Performing Market Sector

Energy is now the best performing sector in Europe so far this year, with a 12-percent gain for the sub-index early on Monday, after bank stocks slumped on the Russia-Ukraine crisis, dragging down the bank index to a year-to-date gain of 11 percent.

As tensions over Ukraine mounted in the past few days, banking stocks in Europe crashed early on Monday amid fears that potential sanctions against Russia over a Ukraine invasion would hit the European banking sector.

At the same time, energy stocks have been performing well in recent weeks, thanks to rallying oil prices and majors reporting multi-year-high profits and cash flows for the fourth quarter of 2021 and for full-year 2021.

So, on Monday, the STOXX Europe 600 Banks index fell by 4.6 percent, according to Bloomberg’s estimates. Year to date, the index has now gained 11 percent, as of early on Monday EST.

The STOXX Europe 600 Energy index, for its part, has gained 12.3 percent year to date. 

As international crude oil prices rallies to $90 and above, shares in the major European oil firms have also been on a tear, offsetting the share price slumps from the pandemic.

The largest oil firms in Europe, Shell, BP, and TotalEnergies, have already offset all the losses in their share prices accumulated since the start of the pandemic, or are really close to doing so, according to Bloomberg’s estimates.

Blockbuster profits from Big Oil for Q4 and 2021 and oil prices rallying to above $90 a barrel helped stocks in oil majors to trade higher in recent weeks.

Shell reported $6.4 billion in net income for the final quarter of 2021 and earnings for the full year of $19.29 billion, up from $4.8 billion for 2020, in what chief executive Ben van Beurden described as a “momentous year.” BP announced last week what was its highest annual net profit in eight years, and TotalEnergies booked a net income of $16 billion for 2021, the highest in over a decade.

By Tsvetana Paraskova for Oilprice.com

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