Rising demand for oil and natural gas upon the resumption of economic and industrial activities and controlled supply from OPEC+ led to high energy prices last year. However, rising Western sanctions on Russian oil have significantly disrupted the oil supply and boosted its prices even higher. As OPEC+ sticks to its original plan to increase oil output by a modest amount, the surging demand is expected to drive prices higher in the upcoming months.
High oil prices should benefit midstream companies with an established network of pipelines and terminals. Investors’ interest in this space is evident from the USCF Midstream Energy Income Fund ETF’s (UMI) 9.2% gains over the past three months versus the SPDR S&P 500 Trust ETF’s (SPY) 10.3% loss.
