Retail investors have been turning to energy stocks this year as the sector has rebounded from the pandemic-induced sell-off. The energy sector was the most demanded by retail investors in the second quarter of this year.
According to MoneyTransfers.com, 20% of retail investors were most interested in energy stocks in Q2’22. Other sectors, such as technology and real estate, also saw demand at 19% and 16%, respectively.
Speaking on the data, MoneyTransfers.com CEO, Jonathan Merry, said,
Firms specializing in exploring, producing, and marketing oil, gas, and renewable resources make up the energy sector. Retail investors are taking a more active role in managing their portfolios and making sector-specific bets. This is in contrast to the wider market, where many investors are still sitting on the sidelines. The energy sector has been one of the biggest beneficiaries of this trend, as retail investors have poured money into stocks that have been out of favor for years. This could be a sign that we are seeing a shift in the market, with retail investors becoming more comfortable taking on risk.
MoneyTransfers.com CEO, Jonathan Merry
The Energy Sector Is Bullish, and the Russian Factor
The oil and gas industry is growing, and there are more opportunities for renewable energy companies. Yet, the skyrocketing increase in oil prices — up more than 50% year to date — fueled the flames of already smoldering energy stocks.
And it is likely that, for the time being, oil prices will stay high. Oil price volatility might persist for many reasons. For instance, lower oil inventories, sanctions on Russia, and any more penalties that may be applied in the future are some of these factors.
By the end of this year, the European Union (EU) will no longer allow the import of 90% of its oil from Russia. Currently, Russia provides 27% of the EU’s imported oil and 40% of its gas.
Investing in Energy Stocks Has Its Benefits
The size of the market and the industry’s recent profits are two major arguments in favor of investing in the energy sector. Besides, the world’s energy market is vast.
Also, the International Energy Agency (IEA) forecasts that by 2035, the world’s energy demand will have increased by more than 30%. This is a positive pointer and a reason to invest the most.
Moreover, several investment opportunities exist in the energy market’s several sectors. One can invest in production, distribution, storage, exploitation, and renewable energy.
Investors are seeing the potential in energy stocks once again, and they are flocking to the sector. This increased demand will likely lead to higher prices and more profits for energy companies.