Oil surged on Monday, posting its largest daily gain in more than five months. Both WTI and Brent crude rose about 8%, marking their strongest one-day increase since mid-May after drugmakers
Pfizer ( PFE Quick Quote PFE - Free Report) and BioNTech ( BNTX Quick Quote BNTX - Free Report) announced successful data from their COVID-19 vaccine study. Oil Prices Jump
In New York, WTI futures was 8.5% higher at $40.29 a barrel, while international oil prices rose 7.5% to settle at $42.40. This was due primarily to the better-than-expected interim data from a large clinical trial of experimental coronavirus vaccine — BNT162b2. Pharma giant Pfizer and its German partner BioNTech claimed 90% efficacy in preventing COVID-19 cases without any serious safety issue. The breakthrough, which brightens chances of the drug’s emergency approval before the year-end, boosted stock markets worldwide with the Dow, the S&P and the Nasdaq all hitting record highs.
For oil in particular, the development holds out hope toward protection against the deadly pandemic that has crushed the commodity’s demand and caused a bloodbath for the energy-related stocks. A potential treatment is expected to revive economic and transport activity, leading to stronger crude usage. Oil’s burst yesterday was also supported by signals from OPEC+ kingpin Saudi Arabia about tweaking the supply cut agreement in a way to balance the market. 4 Energy Firms Moving Higher
The sector ETF is still down 45% year to date and remains one of the three S&P 500 sectors in the red for the year. In fact, energy has been the worst-performing component of the benchmark index so far this year as it continues to struggle with the demand destruction associated with COVID-19-related containment measures. But encouraging news on the vaccine front could well be a precursor to a spike in oil consumption by aiding the economic recovery. In other words, yesterday’s medical breakthrough is seen as a big positive for the hard-hit sector.
Below we present four energy stocks which notched up strong gains on Monday and carry a Zacks Rank of #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. DCP Midstream, LP ( DCP Quick Quote DCP - Free Report) : The integrated midstream partnership, carrying a Zacks Rank #1, has done a fairly admirable job at reducing costs. Its cash outflows decrease as capital expenditure continues to fall with a tight leash on spending levels. Apart from significant capital cuts, the partnership should realize sizeable savings from halving the distribution. Over 30 days, DCP Midstream has seen the Zacks Consensus Estimate for 2020 improve 2.5%. The midstream operator’s units increased by 14.9% on Monday. Abraxas Petroleum Corporation ( AXAS Quick Quote AXAS - Free Report) : This upstream operator is primarily focused on the southeastern Delaware Basin and the Williston Basin. Abraxas Petroleum has an enviable production record at a CAGR of 16% since 2013. The company’s deep inventory of acreage in prime locations is its real asset. Over 30 days, the company has seen the Zacks Consensus Estimate for 2020 surge 93.9%. This Zacks Rank #2 stock jumped 13.8% on Oct 9. Matador Resources Company ( MTDR Quick Quote MTDR - Free Report) : Matador Resources is an oil and gas exploration and production company with activities in the Delaware Basin of Texas/New Mexico, the Eagle Ford Shale, and the Haynesville Shale. The firm’s high-quality asset base, strong hedging portfolio and a robust balance sheet should aid it in facing the tough operating environment. Over 30 days, Zacks Rank #2 Matador Resources has seen the Zacks Consensus Estimate for 2020 surge 191.7%. The company’s shares increased 28.4% on Monday. NuStar Energy L.P. ( NS Quick Quote NS - Free Report) : The company looks well positioned for growth as its diversified asset base, strong pipeline of organic growth projects and contribution from acquisitions bode well and have boosted the partnership’s distributable cash flows. The 2021 Zacks Consensus Estimate for NuStar Energy indicates 147.1% earnings per unit growth over 2020. This Zacks Rank #2 stock jumped 16.8% on Oct 9. Biggest Tech Breakthrough in a Generation
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