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The Zacks Analyst Blog Highlights Occidental Petroleum, Coterra Energy and Hess

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For Immediate Release

Chicago, IL – August 26, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Occidental Petroleum (OXY - Free Report) , Coterra Energy (CTRA - Free Report) and Hess Corp. (HES - Free Report) .

Here are highlights from Thursday’s Analyst Blog:

Oil Jumps to 3-Week High on Inventory Draw, OPEC Speculation

U.S. oil prices finished at their highest levels in more than three weeks after a report from the Energy Information Administration ("EIA") showed a stockpile draw matching expectations. The second straight fall in domestic oil stocks was accompanied by talks of a possible production tightening by the OPEC+ cartel.

On the New York Mercantile Exchange, WTI crude futures added $1.15 or 1.2%, to settle at $94.89 a barrel, its highest finish since Jul 29.

Let's dig deep into the EIA's Weekly Petroleum Status Report for the week ending Aug 19.

Analyzing the Latest EIA Report

Crude Oil: The federal government’s EIA report revealed that crude inventories fell 3.3 million barrels, essentially keeping with expectations of a 3.2 million-barrel decrease per the analysts surveyed by S&P Global Commodity Insights. A drop in U.S. production and a slight uptick in refinery usage primarily accounted for the in-line stockpile draw with the world’s biggest oil consumer even as Washington released in excess of 8 million barrels from its Strategic Petroleum Reserve (“SPR”).

Total domestic stocks now stand at 421.7 million barrels — 2.5% less than the year-ago figure and 6% lower than the five-year average.

The latest report also showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) edged up 426,000 barrels to 25.8 million barrels.

Meanwhile, the crude supply cover was down from 26.2 days in the previous week to 25.9 days. In the year-ago period, the supply cover was 27 days.

Let’s turn to the products now.

Gasoline: Gasoline supplies decreased for the second time in three weeks. The small, 27,000-barrel drop was attributable to a dip in imports and production. Analysts had forecast that gasoline inventories would fall by 2.5 million barrels. At 215.6 million barrels, the current stock of the most widely used petroleum product is 4.6% less than the year-earlier level and 7% below the five-year average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) fell after rising for two weeks. The 662,000-barrel decline primarily reflected a pickup in exports. Meanwhile, the market looked for a supply draw of 360,000 barrels. Following the recent withdrawal, current inventories — at 111.6 million barrels — are 19.4% below the year-ago level and 24% lower than the five-year average.

Refinery Rates: Refinery utilization, at 93.8%, rose 0.3% from the prior week.

Final Word

The Oil/Energy market continues to enjoy support from geopolitical uncertainty amid Russia’s military operations in Ukraine. In March, crude prices surged to multi-year highs of $130 on concerns about supplies from Russia, which is one of the world's largest producers of the commodity.

The U.S. and European Union’s ban on the import of Russian crude and energy products contributed to oil’s rapid price increase. Agreed, crude has pulled back from those lofty levels, but with the conflict showing no sign of a quick resolution and the influential oil exporters’ group mulling on a production curtailment in their next month’s meeting, the commodity has enough reasons to stay elevated in the near-to-medium term.

While there are jitters over soaring inflation, stuttering economic growth and the probable addition of Iranian oil, these have been more than offset by the market’s precariously low level of spare capacity and a stretched-out refining system.

Even the fundamentals point to a tightening of the market. Per the latest government report, U.S. commercial stockpiles have been down some 6% from their five-year average for this time of year, prompted by a demand spike owing to the reopening of economies and a rebound in activity.

As a matter of fact, the Energy Select Sector SPDR — an assortment of the largest U.S. companies thronging the space — has risen nearly 50% year to date against a 13.1% loss for the broader S&P 500 benchmark.

Consequently, three of the top four gainers of the S&P 500 this year are all energy-related names: Occidental Petroleum, Coterra Energy and Hess Corp.

Occidental Petroleum: OXY is the top-performing S&P 500 stock in 2022, with a gain of 158.4%. Occidental Petroleum beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of 21.6%, on average.

OXY has a projected earnings growth rate of 323.5% for this year. The Zacks Consensus Estimate for Occidental Petroleum’s 2022 earnings has been revised 4.8% upward over the past 60 days.

Coterra Energy: This stock is among the best performers on the S&P 500 Index, with shares having appreciated 72.8% in 2022. CTRA has a projected earnings growth rate of 116.9% for this year.

The Zacks Consensus Estimate for Corterra Energy’s 2022 earnings has been revised 7% upward over the past 60 days. CTRA’s expected EPS growth rate for three to five years is currently 55%, which compares favorably with the industry's growth rate of 30.5%.

Hess Corporation: Hess shares have appreciated 66.3% so far in 2022. HES, carrying a Zacks Rank #3 (Hold), has a projected earnings growth rate of 332.4% for this year.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hess’ 2022 earnings has been revised 6.5% upward over the past 60 days. HES beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 7.1%.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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