Interesting coupons in the European oil sector

The new year got off to a rather turbulent start in many aspects. We are still convinced that the stock markets will have a positive development in 2021. The Covid-19 vaccine as well as fiscal policy support from the US and Europe could boost demand again.

For commodities in particular, we expect prices to rise as demand recovers this year. Towards the end of 2021, crude oil prices could reach the previous year's level. Our research analysts’ current expectation for the next 12 months is USD 65 for the barrel of Brent crude oil. We have combined the most important crude oil stocks in our Vontobel Oil Strategy Index. 

The emphasis is on cyclical stocks in the energy sector. This is where we see the greatest opportunities for returns. Europe in particular could benefit, as the markets here tend to be procyclical. 

For this reason, investors could look for interesting profit opportunities in the following three stocks: 

• Royal Dutch: The recent crash in oil prices acted as a catalyst for Royal Dutch Shell, one of the world's largest LNG players. RDS is starting the new year more efficiently and with greater competitiveness thanks to various measures. Our research analysts expect this is likely to ensure better returns in the future.

• Total: The French oil giant is expanding its ownership of renewable energy assets. The strategic plan is to achieve net zero emissions by 2050, while improving financial performance in the short term. Total seems to be adapting its portfolio for the future but is also active in new oil projects across the world in order to deliver in the near term as well.

• ENI: ENI operates in 85 countries and shows a solid balance sheet - although the liquidity-neutral yield of currently USD 45 per barrel is far below our research analysts’ expectations of USD 65 by year-end.

 Please find below our indicative investment opportunities that could be interesting for investors: