Shares of energy companies rose as oil futures remained elevated.
"Oil markets are operating under a veneer of stability, but the underlying system remains acutely stressed," said Ben Hoff, a strategist at French brokerage Societe Generale, citing strategic oil reserves and temporary weakness in Chinese imports. Even if the Strait of Hormuz reopened in early June, given the logistical lag, end-users would see little relief until late July at best, Hoff said.
U.S.-traded oil futures were more or less flat, closing around $108 a barrel, amid skepticism that the U.S. and Iran would reach a deal in the near-term to reopen the critical waterway.
Energy stocks "haven't moved enough to factor in higher oil prices for longer," said Eric Marshall, president of Dallas mutual-fund firm Hodges Capital. "The longer this goes on, the more longer-term structural impact it's going to have."
During a recent visit to Midland, the hub of West Texan oilfield activity, Marshall said local companies indicated they had not drastically increased drilling activity despite the surge in prices this year. "People are not throwing capital at this sector," said Marshall. "The sector has been starved for capital in the last few years; it's an area out of favor. You're not seeing the appetite for leverage that you've seen in the past."
Write to Rob Curran at rob.curran@dowjones.com
(END) Dow Jones Newswires
05-19-26 1733ET
