Mark Lacey and Jonathan Waghorn, co-portfolio managers of the Investec Global Energy fund, believe energy equities are likely to perform well in absolute and market terms.
In a reversal of their historic relationship with energy prices, energy equities were laggards versus both the energy commodity complex and broader commodity sectors during 2010. However, fundamentals and valuation in the energy equity sector point not only to its current value, but also to significant potential upside for 2011. Crude oil markets are now clearly showing signs of tightening, global natural gas markets are strengthening and US natural gas markets, after a depressed 2010, should begin to show signs of tightening. Given that the relative performance of energy equities is hig...
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