The energy sector gained substantially in the second quarter of 2021. Although the industry was dealt a setback by Hurricane Ida earlier this month, it is expected to keep gaining on unprecedented demand. Wall Street analysts expect energy stocks Tellurian Inc. (NASDAQ:TELL) and NextDecade Corporation (NASDAQ:NEXT) to rally more than 75% in price in the near term. Let’s discuss.The mayhem caused by Hurricane Ida earlier this month was of concern to the energy sector. However, the more recent Hurricane Nicholas caused less damage to U.S. energy infrastructure, leaving oil prices largely unchanged. Moreover, the International Energy Agency (IEA) sees oil demand rebounding by 1.6 million bpd in October. Also, as of September 9, natural gas prices were 99% higher year-to-date and could reach 13-year highs this winter.
In the second quarter, average revenues from the energy sector grew 93.9% year-over-year, with oil and gas production industry revenues registering 137.3% growth year-over-year. Investors’ optimism about the industry is evident in the Energy Select Sector SPDR Fund’s (XLE (NYSE:XLE)) 67.2% gains over the past year versus SPDR S&P 500 ETF Trust (SPY) 37.4% returns.
Given the industry’s strong growth prospects, Wall Street analysts expect energy stocks Tellurian Inc. (TELL) and NextDecade Corporation (NEXT), which are currently trading at less than $10, to rally more than 75% in price in the near term.