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Industry View: 3 Oil Stocks to Fuel your Portfolio
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Many circumstances impact the price of oil, including global supply and demand, OPEC, geopolitical events, and more. All the above factors saw drastic shifts in 2022 and drove energy prices higher, making the oil industry one of the top-performing industries tracked by Zacks. Today we will explore potential outcomes for 2023 and three key oil stocks to watch.
Image Source: Zacks Investment Research
Pictured: Energy ETF (XLE - Free Report) illustrates the outperformance energy has enjoyed this year.
OPEC
The Organization of the Petroleum Exporting Countries (OPEC) plays a prominent role in global oil production. Though OPEC is not a monopoly, the cartel controls a huge slice of worldwide oil production. Unsurprisingly, as oil prices rose in 2022, OPEC was not ready to drastically increase production. OPEC has cut production in recent months citing a slower-growing global economy. While the price has drifted lower, it remains much higher than it was a year ago.
Geopolitics
In February, Russia invaded Ukraine, causing oil prices to soar. Eight months have elapsed since that time, and there is no end in sight. Not only has the war impacted those in the region, but it has also affected the global energy market. As many condemned the Russian aggression, countries such as the United States began to levy sanctions on Russian oil. Despite other countries trying to pick up the slack, the oil supply has taken a big hit, and production disruptions are likely to persist.
Supply & Demand
Domestic producers in the United States have yet to respond to the need for more production. Some of the largest oil producers in the United States are producing less oil than they did back in 2019. Oil producers are tepid to start new drilling against the current backdrop of a slowing economy, push for clean energy and ESG practices, and a pause on new oil and gas leases by the Biden administration.
Below are 3 Stocks that will Benefit if Oil Stays Strong in 2023:
Haliburton (HAL - Free Report) is one of the largest oilfield services providers in the world, offering a variety of equipment, maintenance, and construction services to the energy sector. Over the past few years, the company has executed from an earnings standpoint at a very high level. In fact, the oil juggernaut produced earnings surprises every quarter in 2019, 2020, 2021, and 2022. Haliburton boasts a Zacks Ranking of 1 and is part of the best-in-class Oil and Gas – Field Services Group (a top 7% ranked group by Zacks).
Image Source: Zacks Investment Research
Pictured: Haliburton has consistently exceeded earnings expectations.
Like Haliburton, Schlumberger (SLB - Free Report) is part of the highly ranked Oil and Gas – Field Services Group. Schlumberger helps upstream energy players to locate oil and gas and provides other services, such as project management. SLB has grown at a pace of 60% or more for five straight quarters and has accompanied the earnings growth with double-digit revenue growth. SLB sports strong growth and the highest possible Zack’s Ranking of 1. If oil remains elevated, SLB is a best-in-class name.
Image Source: Zacks Investment Research
Pictured: SLB is slated to continue its strong EBITDA growth in 2023.
Occidental Petroleum (OXY - Free Report) is a Texas-based oil and gas exploration and production company. OXY is part of the Oil and Gas – Integrated group, a top 38% ranked group by Zacks. Like SLB and HAL, OXY has produced strong fundamental results in recent quarters. Last quarter, the company reported EPS which grew 180% year-over-year on revenue growth of 39%. Though OXY has a mid-level Zack’s Ranking of 3, the stock is worth watching. Legendary investor Warren Buffett, CEO of Berkshire Hathaway (BRKA) has been piling into shares and has the authorization to purchase up to 50% of the company’s shares. Though the stock has underperformed in recent weeks, it is pulling into its 200-day moving average for the first time in nearly a year. The previous two times, the stock pulled into the moving average. It found support.
Image Source: Zacks Investment Research
Pictured: OXY is testing its 200-day moving average, a key technical spot.
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Industry View: 3 Oil Stocks to Fuel your Portfolio
Many circumstances impact the price of oil, including global supply and demand, OPEC, geopolitical events, and more. All the above factors saw drastic shifts in 2022 and drove energy prices higher, making the oil industry one of the top-performing industries tracked by Zacks. Today we will explore potential outcomes for 2023 and three key oil stocks to watch.
Image Source: Zacks Investment Research
Pictured: Energy ETF (XLE - Free Report) illustrates the outperformance energy has enjoyed this year.
OPEC
The Organization of the Petroleum Exporting Countries (OPEC) plays a prominent role in global oil production. Though OPEC is not a monopoly, the cartel controls a huge slice of worldwide oil production. Unsurprisingly, as oil prices rose in 2022, OPEC was not ready to drastically increase production. OPEC has cut production in recent months citing a slower-growing global economy. While the price has drifted lower, it remains much higher than it was a year ago.
Geopolitics
In February, Russia invaded Ukraine, causing oil prices to soar. Eight months have elapsed since that time, and there is no end in sight. Not only has the war impacted those in the region, but it has also affected the global energy market. As many condemned the Russian aggression, countries such as the United States began to levy sanctions on Russian oil. Despite other countries trying to pick up the slack, the oil supply has taken a big hit, and production disruptions are likely to persist.
Supply & Demand
Domestic producers in the United States have yet to respond to the need for more production. Some of the largest oil producers in the United States are producing less oil than they did back in 2019. Oil producers are tepid to start new drilling against the current backdrop of a slowing economy, push for clean energy and ESG practices, and a pause on new oil and gas leases by the Biden administration.
Below are 3 Stocks that will Benefit if Oil Stays Strong in 2023:
Haliburton (HAL - Free Report) is one of the largest oilfield services providers in the world, offering a variety of equipment, maintenance, and construction services to the energy sector. Over the past few years, the company has executed from an earnings standpoint at a very high level. In fact, the oil juggernaut produced earnings surprises every quarter in 2019, 2020, 2021, and 2022. Haliburton boasts a Zacks Ranking of 1 and is part of the best-in-class Oil and Gas – Field Services Group (a top 7% ranked group by Zacks).
Image Source: Zacks Investment Research
Pictured: Haliburton has consistently exceeded earnings expectations.
Like Haliburton, Schlumberger (SLB - Free Report) is part of the highly ranked Oil and Gas – Field Services Group. Schlumberger helps upstream energy players to locate oil and gas and provides other services, such as project management. SLB has grown at a pace of 60% or more for five straight quarters and has accompanied the earnings growth with double-digit revenue growth. SLB sports strong growth and the highest possible Zack’s Ranking of 1. If oil remains elevated, SLB is a best-in-class name.
Image Source: Zacks Investment Research
Pictured: SLB is slated to continue its strong EBITDA growth in 2023.
Occidental Petroleum (OXY - Free Report) is a Texas-based oil and gas exploration and production company. OXY is part of the Oil and Gas – Integrated group, a top 38% ranked group by Zacks. Like SLB and HAL, OXY has produced strong fundamental results in recent quarters. Last quarter, the company reported EPS which grew 180% year-over-year on revenue growth of 39%. Though OXY has a mid-level Zack’s Ranking of 3, the stock is worth watching. Legendary investor Warren Buffett, CEO of Berkshire Hathaway (BRKA) has been piling into shares and has the authorization to purchase up to 50% of the company’s shares. Though the stock has underperformed in recent weeks, it is pulling into its 200-day moving average for the first time in nearly a year. The previous two times, the stock pulled into the moving average. It found support.
Image Source: Zacks Investment Research
Pictured: OXY is testing its 200-day moving average, a key technical spot.