Re-Energized

The optimism spread well beyond equity markets. Oil futures had another banner day, with West Texas Intermediate crude up 8.1%, to $31.82 a barrel. Just three weeks ago we were talking about negative oil prices. Since then, crude has rallied 75%. Here's Avi Salzman on Barrons.com today: 

The rebound in oil prices has been so sharp and consistent over the past few weeks that it is easy to forget the depth of the plunge. Last month at this time oil fell to its lowest level in history —settling at negative $37—one day ahead of the May contract expiration. The June contract expires on Tuesday, but there doesn’t seem to be much concern that it will go below zero.

Investors are suddenly more bullish about energy thanks to production cuts from key producers and hopes of renewed demand as economies across the world begin to re-open. Earlier today, Mark Haefele, UBS Global Wealth Management's chief investment officer, wrote that oil could continue its march toward $40 by the end of the year.

We believe distortions in oil markets are likely to contribute to continued volatility in markets. But while the market is heavily oversupplied this quarter, we expect it to move toward balance next quarter and become undersupplied in 4Q this year.

This recovery should occur as travel restrictions start to be lifted from mid-May, in line with our central coronavirus scenario, and as oil demand picks up in the second half of the year. Hence, we forecast WTI to recover to USD $40/barrel by year-end.

That's good news for energy companies, which need oil at $40 and above to operate profitably.

Among today's top performers were Halliburton, up 17%, and Marathon Petroleum, up 15%.