Zhitong Financial APP observed that energy stocks are still the biggest winners among U. S. stocks so far this year.The SPDR energy index ETF (XLE.US), led by large oil companies such as XOM.US and CVX.US, has risen nearly 49% so far this year.Other sectors of the US stock market and even the whole market cannot be compared with it.

Despite recent fluctuations in the energy ETF, the uptrend still looks intact. In fact, a key factor driving the strength of energy stocks is the problem of supply disruptions caused by the conflict between Russia and Ukraine, and there is no clear sign that the conflict will end soon. In addition, in the foreseeable future, more and more people think that inflation will continue to some extent, and the energy industry will usher in a perfect "bull market storm".

This week, energy giant BP P.L.C. (BP.US) reported first-quarter results that revenue surged 42.6% year-on-year to $49.258 billion, with adjusted net profit of $6.2 billion, up from $4.07 billion a year earlier and sharply exceeding analysts' forecasts of $4.5 billion. Exxon Mobil Corp's first-quarter results, released earlier, also showed that the company's net profit surged to $5.48 billion from $2.73 billion a year earlier, with a net profit of $8.833 billion excluding specific items ($3.4 billion in Russian business-related expenses).

However, while the companies that exploit and sell fossil fuels are profiteering at a time when global energy prices are rising, the renewable and green energy sectors have been hit, with iShares Global Clean Energy ETF (ICLN.US) falling nearly 6 per cent so far this year.

At the same time, other sectors of US stocks have not risen as much as energy stocks, with utilities and consumer goods, two sectors that have benefited from the current environment and are relatively safe, with the SPDR utility selection industry index ETF (XLU.US) and the SPDR consumer goods selection industry index ETF (XLP.US) up just under 2 per cent so far this year. So far, the worst performer has been the communications services sector, where the ETF (XLC.US) index of selected SPDR communications services is down more than 18 per cent so far this year, almost twice as much as the ETF (SPY.US) of the s & p.

Xiao Mo: energy stocks still have room to rise.

Despite the rebound in large energy stocks, some analysts believe some companies in the energy industry are still undervalued. Dubravko Lakos-Bujas, an analyst at JPMorgan Chase & Co, said: "Energy is the only industry where quality, growth and momentum indicators all improve at the same time and maintain attractive value and income."

As to whether such a strong rally can be sustained, Dubravko Lakos-Bujas said in the report: "the balance of supply and demand continues to tend to rise as commodity prices rise, while supply growth should continue to be affected by ESG policies and the rising cost of capital."JPMorgan Chase & Co predicts that by 2030, energy demand will exceed 20% of the supply.$1 trillion in incremental capital is needed to bridge the gap at the end of the decade.

The analyst added: "Although investor interest and sentiment have risen significantly over the past year from historic lows, energy stocks are far from pricing strong and sustainable prospects for fundamentals and shareholder returns." Against a macro backdrop of geopolitical tensions and inflation, the energy sector looks particularly attractive because it is "a direct investment in every part of the economy and a natural hedge".

Buffett's recent increase in energy stocks may prove it. Cole Smead, president and portfolio manager of Smead Capital Management, said the purchases showed that "energy is the most attractive area of the market for Buffett".

It is worth noting that energy stocks are not risk-free investments. If the conflict between Russia and Ukraine ends, or shows clear signs of it, energy stocks could suffer a sharp sell-off. In addition, energy stocks will face longer-term risks in the process of the world's transition to green energy. Investors are also worried that rising interest rates and the impact of the conflict between Russia and Ukraine will lead to a slowdown or even recession in the global economy, leading to reduced demand for energy.

However, in the short term and beyond, the supply and demand situation still appears to be in favour of traditional energy sources as European and Asian buyers scramble to secure oil and gas supplies at a time of tight supply. But as the US Energy Information Administration (EIA) said in mid-April, energy sources such as oil and natural gas face "a high degree of uncertainty caused by various factors" and such commodities will continue to be affected by the international situation for some time to come.