5 Oil Stocks Your Portfolio Must Have Ahead Of Q1 Earnings
Zacks Investment Research | Apr 15, 2019 09:38PM ET
Crude oil prices, which plunged in the fourth quarter of 2018, have rebounded significantly in 2019. Oil prices recorded the best quarterly gain in the first three-month period of 2019 since 2009 and the best first-quarter gain since 2002.
On Apr 15, the U.S. benchmark West Texas Intermediate (WTI) crude closed at $63.40 a barrel while the global benchmark Brent crude ended at $71.18 a barrel. Year to date, prices of both WTI and Brent crude are up nearly 41%.
Supply Shortages Boost Oil Prices
OPEC and Russia-led oil exporters decided to cut crude oil supplies by 1.2 million barrels per day (bpd) in 2019. As reported by Reuters, Saudi Arabia has decided to keep its oil production below $7 million bpd in April, much lower than Saudi’s previous estimate of 10 million bpd.
On Jan 28, the U.S. government announced sanctions on Venezuela. According to the International Energy Agency (IEA), Venezuela’s crude output is likely to decline from 1.3 million bpd in 2018 to 750,000 bpd in 2019 owing to U.S. sanctions. Moreover, oil export dropped by 159,000 bpd to just under 2.8 million bpd in Iran owing to the imposition of U.S. sanctions.
Meanwhile, a full-scale civil-war has started in Libya and U.S. military has decided to pull out a small contingent of American forces from that country. Breakout of civil-war will significantly disrupt global oil supply in the near future. Per Bloomberg, Libya’s crude production came in at a significant 1.1 million barrels a day in March.
Strong Demand to Drive Oil Prices
On Mar 11, the IEA projected that global crude oil demand will remain firm at least up to 2024 although the rate of demand growth will decline. By this time, oil demand will rise by 7.1 million bpd.
Despite a surge in sales of electric car and massive oil exploration in the United States, soaring demand for oil for the petrochemical industry, especially for plastic and growing demand for aviation oil will support crude oil prices.
Moreover, robust U.S. job data and manufacturing data in March as well as a rebound in China’s manufacturing PMI in March will help oil prices to remain firm in the near term. A solution to the U.S.-China trade dispute will be a major boost for the world economy.
Our Top Picks
At this stage, investment in stocks engaged in exploration and production of crude oil with a favorable Zacks Rank will be prudent. We have been able to narrow down our search to five stocks with a Zacks Rank #2 (Buy) and positive Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.