Key takeaways:

• Runaway commodity prices are the catalyst for the energy sector outperformance in 2022

• Trading in energy stocks eased in 2022 across the Selfwealth community, albeit coal shares enjoyed a revival of sorts as part of a focus on a concentrated group of names

All but written off by some amid the shift to renewables, energy stocks have delivered a bumper year. 

In fact, energy shares are the year best performing sector, with the ASX cohort up 38.2% year-to-date. It is just one of three segments that have delivered a positive return in 2022.

Between oil, gas, coal, and even uranium, money has flowed into the sector following a sudden shift in the global energy landscape.

However, despite being the standout sector in 2022, the Selfwealth community interest in energy stocks has been a mixed affair. Here are some of the key trends and observations covering trading activity in energy stocks this year.

Why Energy Stocks Outperformed in 2022

As with just about any other resource stock, higher commodity prices played a key role delivering an earnings boost for most of the energy sector, in turn fuelling significant share price returns.

At various times throughout the year, oil, gas, coal, and uranium prices either set new records, or hit multi-year highs. Oil made a 13-year high and broke above US$130 per barrel. Thermal coal and coking coal hit record highs of around US$450 per metric tonne and US$600 per metric tonne respectively. Uranium reached an 11-year high of US$65 per pound in April.

The catalyst for much of the sector resurgence was the outbreak of the war in Ukraine. This knocked out oil, gas, and coal supplies from Russia, either directly or indirectly via sanctions.

In response, this forced a shift in the global energy mix. Countries like Japan and Germany have turned back to nuclear power. Limited gas supplies and soaring prices prompted many countries, including those in the EU, to cut their dependence on Russian imports and switch from natural gas to coal. Various countries were forced to extend the life of coal plants, or reopen closed coal plants.

Combined with India economic growth, global coal demand hit an all-time high this year at the same time supply was disrupted by inclement weather. Furthermore, buyers have paid higher coal prices due to increasing freight costs and difficulties finding international spot cargoes.

The decision by OPEC+ to cut oil production output also complicated the energy equation this year.

Community Trading Trends

While the value of energy shares traded in 2022 is 44.5% higher than 2021, this was largely a byproduct of higher share prices across the sector. The buy-to-sell ratio for the value of shares traded decreased from 52.3% to 50.6% over this time.

Meanwhile, trades in energy shares declined 13.6%. Again, the shift tilted towards selling activity, with the buy-to-sell ratio declining from 60.7% in 2021, to 57.3% in 2022.

There are several possible explanations behind this drop. Investors have likely locked in profits as the share prices of energy holdings soared. Selfwealth members may hold a more conservative outlook for the energy sector, viewing its resurgence as a windfall' of the war. Interest in battery metals continues to outrank energy stocks, suggesting long-term conviction lies with renewables.

Despite community interest easing, investors with an appetite for energy stocks traded a more concentrated group of names than in 2021. 

Top 20 Energy Stocks in 2022 (by trades)

Stock

Buy-to-SellRatio

Share Price(YTD to Dec 13)

Rank byValue Traded

1. Woodside Energy (ASX: WDS)

45.7%

60.2%

2

2. Whitehaven Coal (ASX: WHC)

54.4%

267.4%

1

3. Renascor Resources (ASX: RNU)

65.4%

80.0%

6

4. Santos (ASX: STO)

54.4%

12.5%

4

5. New Hope (ASX: NHC)

59.8%

157.4%

3

6. Paladin Energy (ASX: PDN)

58.2%

-21.0%

7

7. Beach Energy (ASX: BPT)

48.7%

27.8%

5

8. Washington H. Soul (ASX: SOL)

73.5%

-7.3%

10

9. Yancoal (ASX: YAL)

62.4%

129.6%

8

10. Invictus Energy (ASX: IVZ)

59.5%

123.1%

15

11. Melbana Energy (ASX: MAY)

64.6%

245.0%

9

12. Boss Energy (ASX: BOE)

58.8%

-5.3%

11

13. 88 Energy (ASX: 88E)

63.1%

-60.0%

16

14. Peninsula Energy (ASX: PEN)

57.5%

-40.0%

22

15. Alligator Energy (ASX: AGE)

57.7%

-23.6%

17

16. Deep Yellow (ASX: DYL)

61.4%

-17.4%

21

17. Terracom (ASX: TER)

57.6%

369.4%

14

18. Bannerman Energy (ASX: BMN)

64.1%

-40.4%

20

19. Stanmore Resources (ASX: SMR)

57.5%

162.1%

12

20. Worley (ASX: WOR)

44.3%

35.9%

13

The top 10 energy shares traded by value dominated money flow, representing 74.2% of all funds across the sector. In 2021, the top 10 made up 65.7%. The top two stocks were responsible for 35.2% of money flow. This is equivalent to the next six highest ranking stocks by the value of trades made.

Similarly, the top 10 most actively traded energy shares accounted for 52.2% of all trades in 2022, up from 46.2% the year prior. 

In both cases, no US-listed energy stock featured among the top 50, despite huge gains on offer. This suggests Selfwealth members favour the familiarity of the ASX for energy stocks, perhaps due to its reputation as a home' for commodity stocks.

Coal stocks, arguably the best performing sub-sector in 2022, offer some interesting insights. Six of the top 20 most traded stocks offer exposure to coal - in all but one instance, directly.

The Selfwealth community bought coal stocks on more than 8,500 occasions in 2022, valued at over $211 million. In 2021, there were just 3,500 buys' across this cohort, worth around $51 million. 

Furthermore, the buy-to-sell ratio for coal stocks trended in the opposite direction of the broader energy sector, skewing towards buying activity. The buy-to-sell ratio for trades increased from 55.1% to 59.7%, while the ratio for money flow lifted from 49.1% to 52.4%.

Notwithstanding an overall decrease in trading across the energy sector, the data surrounding coal suggests the significant gains from this cohort resonated with Selfwealth members despite negative perceptions around the commodity.

Highlights Behind the Top 20

Uranium underperformed the broader energy sector this year. Paladin Energy (ASX: PDN), Boss Energy (ASX: BOE), Deep Yellow (ASX: DYL), Peninsula Energy (ASX: PEN), Bannerman Energy (ASX: BMN), and Alligator Energy (ASX: AGE) are all down in 2022. That follows a huge rally by this cohort in 2021, suggesting higher uranium prices were already factored into their share prices.Woodside Energy (ASX: WDS), Beach Energy (ASX: BPT), and Santos (ASX: STO) gained ground on account of higher earnings driven by a surge in oil prices through the first half of the year. In the case of junior oil and gas explorers like Invictus Energy (ASX: IVZ) and Melbana Energy (ASX: MAY), project updates underpinned share price gains in 2022. Last month, Invictus reached total depth at its Zimbabwe well, including multiple zones encountering elevated gas shows¯. A growing prospective resource at the Alameda Reservoir in Cuba has supported Melbana share price.Coal stocks top the market in 2022. Whitehaven Coal (ASX: WHC), New Hope (ASX: WHC), Yancoal (ASX: YAL), Stanmore Resources (ASX: SMR), and Terracom (ASX: TER) all benefitted from, and continue to benefit from sky-high coal prices.Although not a coal stock per se, Washington H. Soul Pattinson and Co (ASX: SOL) is classified as an energy stock by the ASX due to its significant investment stake in New Hope. The company non-coal exposure ultimately weighed on its overall performance in 2022.Lastly, Renascor Resources (ASX: RNU) emerged in 2022 as a hopeful player in the clean energy transition. Although a graphite mineral explorer, the company is classified as an energy stock. Investors continue to support the company as it lays claim to the largest verified reserves of graphite in the world - including recent upgrades to resource estimates - and following approval to construct its battery anode material (BAM) manufacturing plant.