Oil and gas inventories are set to rise after Russia cut off gas to Europe, and a strategist says there are “absolutely opportunities” in the sector right now. Russian energy giant Gazprom on Friday announced an indefinite halt to gas flows to Europe via the Nord Stream 1 gas pipeline, citing the need for repairs. It came hours after the economic powers of the Group of Seven agreed on a plan to impose a cap on Russian oil prices in a bid to cut Moscow’s oil revenue. “Whether or not it’s oil, its natural gas, its coal, which has just performed magnificently again this year, and I think it will continue to perform magnificently in light particularly of what we heard yesterday,” Kenny Polcari, chief market strategist at SlateStone Wealth, said Tuesday, referring to the pipeline shutdown. ‘Bullish shock’ This comes after Goldman warned in a note on Friday that one of the main risks of imposing a price cap on Russian oil was the ‘potential of Russian retaliation’. “[It] would turn this into an additional bullish shock to the oil market,” Goldman analysts wrote. “In line with the measures taken in the natural gas market, Russia could choose to retaliate, cutting off G-7 buyers and halting production, thereby increasing global prices. and its own revenues even assuming higher logistics costs for non-participating countries. Oil and gas prices soared after the news, with European gas prices climbing as much as 30% on Monday. Prices pared some gains on Tuesday, although first-month gas The price on Dutch hub TTF , a European benchmark for natural gas trading, was still trading around 221 megawatt-hours, down from around 214 megawatt-hours on Friday. Crude prices saw less gains, but Brent and WTI futures were still up. up more than 2% on Tuesday Polcari stressed that investors should “absolutely not” invest at random, given the volatility, and advised investors to focus on big U.S. energy names. who are also good dividend-payers.”Look at the big names paying dividends, okay, the ones that will offer some stability but also upside opportunities and energy for sure,” Polcari said. Listed two such stocks: ExxonMobil and Chevron. ExxonMobil offers a 5-year average dividend yield of 5.5%, while Chevron’s average is 4.4%, according to FactSet data. Polcari said he would go long on natural gas and coal, citing U.S. exploration and production company Chesapeake Energy as a way to profit – its production mix is biased towards natural gas, according to the company. He also picked another natural gas producer – Comstock Resources – which is up 125% this year and he says he still has “room to spare”. “I don’t think it’s over by far. We’re just entering winter in the northern hemisphere. You see what’s happening in Europe,” he said. Polcari also named US coal mining company Peabody Energy as one of his favorites, and for investors who want to play energy through funds rather than stocks, he named the Energy Select Sector Fund SPDR . – CNBC’s Holly Ellyatt contributed to this report.
