In spite of the recent volatility in capital markets, BlackRock's Natural Resources Team believes that energy stocks may offer attractive investment opportunities going forward. Continued oil price strength has meant that oil company earnings are likely to be strong and these companies may prove to be a real area of opportunity for investors. Meanwhile, alternative energy companies may also do well as this sector continues to move up the political agenda and the consumers continue to utilize increasing volumes of alternative energy sources.
Robin Batchelor, fund manager of the BlackRock World Energy Fund and the BlackRock New Energy Investment Trust, commented: "Energy stocks are in a good position to perform well during the rest of 2008 and beyond. Supply and demand fundamentals appear supportive of the oil price. Oil company earnings should remain buoyant as prices remain high, supported on one side by relatively lacklustre supply growth and on the other by booming demand from emerging markets. This demand won't be restricted to just China and India - energy use is also growing in many other areas of the world, with Russia, Eastern Europe and the Middle East also notable areas of demand growth.
"Alternative energy companies will benefit from government efforts to promote new sources of energy, spurred by concerns about climate change and energy security. You need only look at the US elections to see how important an issue renewable energy has become. Both of the likely candidates for the US Presidency have outlined plans for ambitious carbon reduction targets, the reduction of emissions and the increased use of alternative energies. "The new energy industry has matured tremendously since we launched the Trust in 2000. There are now around 1100 companies in our universe, compared to just 350 when we launched. Production and consumption of alternative energy has been increasing steadily and we are optimistic about the sector's prospects for future growth."