Oil prices inched closer to a six-week high on Nov 4, thanks to renewed investor optimism in the sector’s potential. Of course, investors have a solid reason to feel so. After all, substantial progress has taken place in the U.S.-China trade deal lately. Let us take a look at some oil stocks that stand to gain under these favorable circumstances.
Oil Rises on Hopes of US-China Trade Resolution
West Texas Intermediate crude oil rose 3.7% to settle at $56.20 a barrel on the New York Mercantile Exchange on Nov 4. Global benchmark Brent crude also moved up, settling at $62.13 on Monday. Brent crude has added more than 4% since Oct 31.
Both benchmarks have taken the road north since Thursday, owing to positive news on trade resolution that eliminated fears of a global growth slowdown. In addition, an unexpected bounce in Chinese manufacturing also drove investor optimism.
American and Chinese negotiators have made “enormous progress” to reach the first phase agreement of the trade deal, White House economic adviser Larry Kudlow told reporters last week. Although the deal is yet to be concluded, investors remain highly hopeful that it will be struck by the end of this year.
Should a trade deal materialize, oil prices would climb. This is because China is the biggest importer of crude oil in the world and settlement to U.S.-China trade dispute would boost China’s demand for crude.
Saudi Aramco’s IPO Makes Progress
Investors worldwide by the way definitely anticipate the oil and energy sector to register gains. This is why Saudi Arabia is making notable progress on publicly listing its national oil company Saudi Aramco. After all, the oil giant is deemed the world’s most profitable company.
Who Stands to Benefit from Oil’s Uptick?
This increase in oil price could fuel stocks of those companies that are prominent participants in activities such as oil exploration and production, drilling, transportation and storage of oil etc. These companies ideally have upstream and midstream operations and benefit by selling oil.
4 Stocks to Buy
We have, therefore, selected four stocks of companies that are engaged in the aforesaid activities in the oil and energy sector. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Sasol Limited SSL develops and manages upstream interests in oil and gas exploration and production on numerous locations worldwide. The company carries a Zacks Rank #1. The Zacks Consensus Estimate for Sasol’s current-year earnings has risen 12.7% over the past 60 days.You can see the complete list of today’s Zacks #1 Rank stocks here . OMV Aktiengesellschaft OMVJF is an integrated oil and gas company. The company sports a Zacks Rank #1. The Zacks Consensus Estimate for OMV Aktiengesellschaft’s current-year earnings has risen 7.8% over the past 60 days. Pembina Pipeline Corporation ( PBA Quick Quote PBA - Free Report) offers transportation and midstream services to the energy industry. The company operates heavy oil pipeline assets. The company carries a Zacks Rank #2. The Zacks Consensus Estimate for Pembina Pipeline’s current-year earnings has risen 6.9% over the past 60 days. EP Energy Corporation EPEGQ is an independent exploration and production company. The company carries a Zacks Rank #2. The Zacks Consensus Estimate for EP Energy’s current-year earnings has risen 9% over the past 60 days. More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>