The ASX energy sector is on a tear since the oil price bounced from its unprecedented meltdown, but the bears might be ready to pounce again.

In case you forgot, the WTI crude benchmark crashed into negative territory for the first time in history on April 20 before rebounding to US$35 a barrel while the Brent nearly doubled since bottoming to US$38 a barrel.

The turnaround sent the Oil Search Limited (ASX: OSH) share price jumping 27% and the Santos Ltd (ASX: STO) share price climbing 25% over the period.

These stocks are more leveraged to the oil price and explains why the Woodside Petroleum Limited (ASX: WPL) share price is trailing with “only” a 9% gain. But that’s still miles ahead of than the 5% increase in the S&P/ASX 200 Index (Index:^AXJO).

More production cuts to support market

However, the party for our energy producers may not last. Experts are casting doubt on the sustainability of the oil price rally even as OPEC and Russia (OPEC+) moved forward their meeting by a week to this Thursday.

There’s speculation that the oil producing bloc will extend the supply cuts that triggered the recovery and moved their next meeting forward to speed things along.

But Australia and New Zealand Banking GrpLtd’s (ASX: ANZ) commodities strategist Daniel Hynes told the Australian Financial Review that this could be a bearish sign instead.

Oil party pooper

OPEC+’s eagerness to bring forward their meeting and keep production quotas in place signify that demand for crude isn’t recovering at the same pace as prices.

Demand for oil plummeted due to the COVID-19 shutdown of the global economy. While the gradual reopening of some countries is lifting demand for fuel, the recovery is patchy, especially as air travel remains off the cards.

The widespread racial riots in the US sparked by the death of George Floyd is also hurting demand for the commodity.

US drivers in a jam

The US summer driving holiday season looks over before it began with Hynes saying that demand was down 25% to 30% over the Memorial Day holiday on May 25, which usually kicks off the season.

“The US driver consumes about 10% of the world’s oil. So, it’s an important sector,” he told the AFR. “Any data highlighting how it’s going will be focused on.”

Foolish takeaway

While oil market looks prone to a pullback, or even a correction, its unlikely that we will see oil turn negative again.

As I wrote back then, that was probably the only occasion time in our lifetime that we will witness such an event.

This means the worst for the market is likely behind us, although the volatility means investors will need to reasonably strong stomach if they wanted to invest in ASX oil-exposed stocks.

More reading

• 2 ASX 200 shares to watch on Tuesday
• How to value the big four ASX banks
• Where to invest $5,000 into ASX 200 shares immediately
• 3 ASX 200 resources shares to buy today
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX 200 shares had a strong start to the week as the S&P/ASX 200 Index (ASX: XJO) jumped 1.10% higher on Monday.

The Resources sector led the benchmark index higher yesterday thanks to strong commodity prices. However, there were more mixed performances across other industries as the market volatility continued.

Find out which ASX 200 shares I’m watching during today’s trade.

2 ASX 200 shares to watch on Tuesday

The BHP Group Ltd (ASX: BHP) share price is one I’m keeping my eye on today. Shares in the Aussie miner jumped 3.09% on Monday thanks to strong iron ore prices, although it has opened today down by 1.68%.

At the time of writing, BHP is worth a whopping $169.1 billion and is the largest ASX 200 share by market capitalisation right now.

Investors could continue to back the Aussie miner in 2020, but I still think its a speculative buy right now with so much uncertainty around trade.

However, there are some tailwinds in the market right now which could push the BHP share price higher. Momentum could be a big factor and I think BHP is one ASX 200 share worth watching today.

Other than BHP, Wesfarmers Ltd (ASX: WES) could be moving. Wesfarmers is an interesting business in a unique position right now.

The Aussie conglomerate is sitting on a pile of cash after selling part of its stake in Coles Group Ltd (ASX: COL) for $1.1 billion. However, it’s not all good news for the ASX 200 share right now.

The group is currently restructuring its retail arm, Kmart Group. In fact, Wesfarmers recently announced the closure of 75 Target stores as sales continue to slump.

Despite opening slightly down this morning, the Wesfarmers share price has still climbed nearly 8% higher this year and is worth keeping on a watchlist. A strong balance sheet is a big plus and provides flexibility to buy more portfolio companies if the right opportunity arises.

Foolish takeaway

There are always many ASX 200 shares worth watching. These are just a couple of the large-caps that I’m keeping an eye during another big day of trade.

More reading

• The big oil price recovery and bounce in ASX oil stocks are bringing out the bears
• 3 ASX shares to buy and hold for the next 2 decades
• Where to invest $5,000 into ASX 200 shares immediately
• 3 ASX 200 resources shares to buy today
• 3 strong ASX dividend shares to buy right now

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There aren’t too many ASX shares that I’d feel comfortable about buying and committing to owning for two decades.

But there are a few that I think could be solid ultra-long-term picks. They have shown their worth in the coronavirus so far. 

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts could be one of the best ASX shares to invest for the long-term in. Only an exchange-traded fund (ETF) may have a better claim.

It has already been listed on the ASX for over a century, so it clearly has great longevity. But I don’t think it’s on the cusp of irrelevance at all. It’s an investment conglomerate so it can change its investment holdings as time goes on. Soul Patts is apparently about to start investing in regional data centres, a big growth area right now. Current large investments include telecommunications, building products and resources. 

Of the current shares in the ASX 200, I think Soul Patts could be among the group that will operate for the longest time into the future.

The management team of Soul Patts themselves invest for the long-term within the company. So it has long-term characteristics. It is steadily increasing its dividend, which is another attractive future.

Xero Limited (ASX: XRO)

There are only two things certain in life (as the saying goes). Death and taxes. You can’t do a business tax return without tracking your income, expenses, assets and liabilities, then making financial statements. So why wouldn’t you want to use the best tools available?

Xero is an ASX share that provides cloud accounting software and it’s resonating with clients across the world.

It’s no surprise that Xero has a strong market share in New Zealand and Australia as it’s a local business with a great service. But it’s also growing at an extraordinary rate in the UK and doing well in other areas of the world.

Xero generates attractive monthly cashflow at a very high gross profit margin. At the moment Xero is investing heavily for growth and it’s paying off. In two decades (or just one) it could be one of two clear market leader providers in the world.

Wesfarmers Ltd (ASX: WES)

Wesfarmers isn’t normally an ASX share I’d suggest is one of the best dividend shares, or one of the best growth shares. But I think it’s a great blue chip.

It isn’t stuck being a bank or a miner. It will happily adjust what operating businesses it owns over time. Remember that it acquired and years later divested Coles Group Limited (ASX: COL). Wesfarmers isn’t afraid to make big, bold moves. Even if they don’t work out – look what happened to Bunnings UK and Ireland.

The point is that Wesfarmers can acquire businesses to position it for future success. For example, it recently acquired a lithium miner and it also acquired online retailer Catch Group.

Of course, its current businesses are also fantastic. Bunnings may be the best retail businesses in the country.

Foolish takeaway

I think all of these ASX shares would make very good ultra-long-term investments at the current prices. Xero may be able to generate the most growth if it keeps adding subscribers, but I prefer Soul Patts for its diversification.

More reading

• 2 ASX 200 shares to watch on Tuesday
• 3 strong ASX dividend shares to buy right now
• Buy these ASX growth shares for monster returns
• Why Woolworths shares are offering a rare buying opportunity today
• These ASX shares are set to get a big boost from the next big government stimulus

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