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5 Energy Stocks to Buy as Crude Oil Surges Again

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In a favorable turn of events for the beleaguered energy sector, the price of Brent crude – the international benchmark for oil prices – rose by more than 6% on Dec 11, 2016 to over $57 a barrel. This was mainly because some of the world's largest oil producers outside the Organization of the Petroleum Exporting Countries (OPEC), including Russia, agreed to reduce output by 558,000 barrels a day.

The move to curb output by the non-OPEC countries came close on of the heels of OPEC’s decision to cut production by1.2 million barrels a day in late November. The 558,000 barrel decline from non-OPEC, together with the OPEC agreement, will total reduction of 1.8 million barrels a day, which is about 2% of the global production.

Moreover, the positive market sentiments were further boosted when Saudi Arabia announced its intentions to go for the maximum reduction. The Middle-Eastern country had agreed to a 486,000 barrel cut in the November meeting.

What Does This Mean for Oil Stocks?

The impact of OPEC’s decision on the energy world was immediate as share prices of energy companies around the globe rose. The announcement also led to improvement in the currencies of large exporters. Some of the biggest gainers from OPEC’s announcement were U.S. Exploration and Production companies.

Following the rise in oil prices above the $55 per barrel level, the players involved in exploration and production (E&P) activities are now better positioned to sell crude at higher prices. This should enable them to generate more cash flows for shareholders in the coming days.

We have used the Zacks Stock Screener to narrow down to five stocks that offer Growth score of ‘B’ or better and boast a favorable Zacks Rank #1 (Strong Buy).

5 Stocks to Bet On

Diamondback Energy, Inc. (FANG - Free Report)

Diamondback Energy is an independent oil and natural gas company that focuses on the acquisition, development, exploration, and exploitation of onshore oil and natural gas reserves in the Permian Basin in West Texas. The stock has a Growth score of ‘B.’ You can see the complete list of today's Zacks #1 Rank stocks here.

McDermott International Inc.

McDermott International is an engineering and construction company, which is solely focused on the offshore oil and gas business. The stock has a Growth score of ‘B’ and has an expected earnings growth rate of 34.8% for the current year.

 SunCoke Energy, Inc. (SXC - Free Report)

SunCoke Energy offers metallurgical and thermal coal for use as a raw material in the blast furnace steelmaking process. It also provides coal handling and/or mixing services to steel, coke, electric utility, and coal mining customers. The stock has a Growth score of ‘B.’

Braskem S.A. (BAK - Free Report)  

Braskem, together with its subsidiaries, produces and sells thermoplastic resins. The stock has a Growth score of ‘A’ and has an expected earnings growth rate of 37.8% for the current year. 

Ocean Rig UDW LLC

Ocean Rig was founded in 2010 and is based in Houston, TX. This stock from the Oil and Gas Drilling industry has a Growth score of ‘B’ and has an expected earnings growth rate of 96.4% for the current year. 

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