ASX Trader: Energy stocks set to surge, here’s how to cash in

There’s a looming supply crisis which is set to send energy stocks soaring and savvy investors can get in on this unfolding story early, writes ASX Trader.

Just over a month ago, I called the bottom in energy and that call has been playing out nicely with uranium leading the charge.

Energy names globally are bouncing, oil is breaking out, and the macro setup suggests this may only be the beginning.

While many are still fixated on tech and AI, smart money is rotating into the one sector that fuels them all: energy.

A supply crisis brewing: Strategic reserves at 40-year lows

The U.S. Strategic Petroleum Reserve (SPR) is basically America’s emergency oil stash.

It was created after the 1970s oil crisis to ensure the country had backup fuel in case of supply disruptions.

Think of it like a savings account - but for oil.

Over the past couple of years, the U.S. government released more than 200 million barrels from this reserve to help bring down inflation and lower fuel prices.

But here’s the catch: the reserve is now at its lowest level since the early 1980s, and there’s no solid plan to refill it anytime soon.

All of this is happening while the world faces serious risks - like conflict in the Middle East, the war in Ukraine, and oil production limits in countries like Venezuela and those in OPEC. In simple terms: supply is tight, demand is rising, and we’ve already used up a big chunk of our safety buffer.

This isn’t just a “what if” scenario. It’s the new reality - a tight, fragile energy market with very little room for error.

US Ending stocks of crude oil.

While some may point fingers at Trump, it was the Biden administration that authorised the drawdown. Trump’s renewed call to “drill, baby, drill” is a direct response to this self-inflicted energy vulnerability.

SPR levels by president.

Demand surge from the AI revolution

Energy isn’t just about transport and heating anymore.

Every AI data centre from Sydney to Silicon Valley consumes massive amounts of electricity. The International Energy Agency (IEA) warns that electricity demand from AI and crypto mining could increase up to 10x by 2030.

Data centres, chips, cooling, and the global compute arms race all need one thing: energy. The AI boom is becoming an energy super-cycle.

AI is driving massive demand on energy.

The technical picture is taking shape

When I teach market structure, I always explain that prices usually break through key levels - like support or resistance for one of two reasons: either the trend is continuing, or the market is trying to trick traders by grabbing liquidity (this happens when the price dips just enough to shake people out before reversing).

A few months ago, crude oil dropped below a major support level around $65 on the weekly chart.

That made it look like the market was breaking down but now, oil has climbed back above that level.

This kind of move often signals a “liquidity sweep,” where the market briefly breaks a key level just to trap traders before reversing direction.

If oil can now stay above $65 and show that buyers are stepping back in, this could mark a major turning point not just a short-term bounce, but a larger shift in the overall macro trend.

The oil price chart

How to play it on the ASX

Australian investors have some powerful ways to get exposure to this unfolding story:

For Growth + Dividends:

Woodside Energy (WDS)

• Australia’s largest independent oil and gas producer

• Strong free cash flow and one of the most consistent dividend payers

• Well positioned for both LNG and crude exports

For Stability and LNG Leverage:

Santos (STO)

• Large-scale LNG operations across Asia-Pacific

• Clear project pipeline and consistent capital returns

• Potential M&A activity could also re-rate the stock

For Pure Growth:

Beach Energy (BPT)

• A nimble mid-cap with exposure to Australian and New Zealand gas

• Attractive entry at current technical levels

• Often overlooked during market rotations and now gaining attention

For a Leveraged Oil Play:

Betashares Crude Oil ETF (OOO)

• Tracks the performance of crude oil futures

• Offers indirect, leveraged exposure to the oil price

• Not a long-term hold — best used for short- to medium-term momentum plays

The final word

We began discussing a potential bottom in energy over a month ago, not from guesswork, but by paying attention to key macro shifts - limited investment in new supply, accelerating demand from AI and industrial revival, and stress within the global reserve framework.

This view is no longer on the fringes.

The narrative is shifting.

For ASX investors, now may be a smart time to reassess positioning in light of this broader regime change.

Originally published as ASX Trader: Energy stocks set to surge, here’s how to cash in