Energy prices have fallen, but oil stocks are still being bought:

According to Bill Smead, chief investment officer at Smead Capital Management, oil prices have fallen sharply from recent peaks, but there is still a case for buying oil stocks.

That’s because energy prices are likely to stay high or even rise further, he told CNBC’s “Asian street signs” on Thursday.

He described the slide in crude oil prices as the “first major correction” in a bull market that began in spring 2020 after price drop.

“You have this one giant move, you go from $20/barrel to $120 and then back again — and now people will say, ‘Oh, that’s it, that’s it,’” Smead said. will cure inflation”.

We like the oil stocks here. You can buy them here, Warren Buffett is buying it here.

Bill Smead

Chief Investment Officer, Smead Capital Management

But several factors suggest prices will rise, he said.

America must replace 180 million barrels of strategic reserves he pointed out that has been reduced to meet demand, and supply is still scarce.

“What happens when the Chinese economy fully opens… gets out of their control and out,” he questioned, suggesting that demand will pick up again.

Violent outbreaks in China have prompted shutdowns this year and brought energy consumption down in the world’s most populous country.

Read more about energy from CNBC Pro

Demand is likely to rebound as movement restrictions are eased.

“We like the oil stocks here. You can buy them here, Warren Buffett is buying it here“Smead said.

Brent Crude Oil Futures and US West Texas Intermediate Futures both spiked to above $120 per barrel this year, but are now at $96.88 and $90.88 per barrel, respectively.

However, both benchmarks are up more than 40% from a year ago.

– CNBC’s Thomas Franck and Yun Li contributed to this report.

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