The best oil stocks have been caught up in the volatility, but their more modest declines illustrate the long-term staying power unmatched by more fashionable energy plays. It’s important for investors to be aware of the oil sector’s volatility. Because of that, it’s best to focus on companies built to weather the sector’s inevitable downturns.

Here are some of the top oil stock picks that could continue to perform well for the rest of 2023. Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all available deposit, investment, loan or credit products. Canadian oil and gas stocks have faced a rollercoaster ride over the past few years. The chart below from the IEA shows how world demand and supply for crude oil have been growing steadily since 1971.

Marathon Oil Corporation (MRO)

Last on this list of top Canadian oil and gas dividend stocks is Birchcliff Energy. The company is an intermediate oil and natural gas firm with operations focused on the Montney/Doig resource play in the Peace River Arch area of Alberta. IEA member countries are required to ensure oil stock levels equivalent to no less than 90 days of net imports and to be ready to collectively respond to severe supply disruptions affecting the global oil market. Each Member country is thus able to determine how to fully meet their IEA stockholding commitment in the manner most appropriate to their domestic circumstances. Crescent Point Energy was founded in 1994 and is a Canadian crude oil and natural gas exploration and production company.

At the time of writing CPG was trading at $6.84 and was below both the 50-day and 200-day moving averages. Some signs a bullish momentum may be picking up again can only be seen if the price manages to trade above its 200-day moving average again. Following the hottest stocks can be a good way to track what the market likes right now. But if you’re investing in individual stocks or even sector-based funds, it’s vital that you analyze the business and understand how you’re going to make money in the future and not invest through the rear-view mirror. You’ll end up chasing yesterday’s performers and miss out on tomorrow’s. It is important to note that this article does not constitute financial or investment advice.

FANG returned 35.5% last year, which actually made it a sector laggard. With an average price target of $130.42, Wall Street gives COP implied price upside of about 22% in the next 12 months or so. Add in the dividend yield, and the implied total return comes to about 25%. Collectively this allows for a bit more certainty than you would find in a laser-focused oil stock that specializes in only one part of the supply chain. Oil prices have been roughly cut in half from their 2022 highs around $120 a barrel. Thanks to falling crude prices, oil stocks are on the backfoot this year.

Oil stocks

For example, when the Covid-19 pandemic caused millions of offices and businesses to close, it had a devastating effect on the oil and gas sector. In fact, at one point, the futures contract for a barrel of oil turned negative. The NYSE-listed company operates oil and gas production facilities in the US, Australia, Kazakhstan and Africa. It has grown its domestic supply in the US by 10% over the past year. The bank cited integrated oil companies and midstream C-Corps as its favoured investment options as the oil stock to watch.

• The chart below from the IEA shows how world demand and supply for crude oil have been growing steadily since 1971.
• Adjusted earnings came in at $3.30 per share versus $3.09 in the same period a year ago.
• The company has a diverse portfolio of assets, including production, development, and exploration properties, as well as offshore facilities.
• Unlike most of its peers, PXD has a set quarterly dividend and then a variable dividend based on the company’s free cash flow.

The primary reason why oil stocks in general trade down is a weak economy. As demand for energy is a key factor in oil company earnings, a recession, or even a period of mildly softening economic conditions, can negatively impact oil stock share prices. Oversupply can also soften oil prices, again leading to depressed earnings.

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And Canada, that collectively adds up to 3.2 million barrels per day. The company also owns 12 ethanol plants that crank out 1.6 billion gallons of the biofuel on top of that. The coronavirus pandemic caused global oil demand to crash while oil producers slashed their output to ride out the downturn.

The world’s largest oil-exporting nations include members of OPEC (Organization of the Petroleum Exporting Countries), a cartel that works to coordinate members’ oil policies. It can withhold supply to push prices higher or increase its output to drive them lower. OPEC has wielded its power over the years, causing massive fluctuations in oil prices.

It has beaten analyst estimates for more than four quarters and also offers a 2.65% dividend yield. Following a drastic drop in 2020 due to pandemic-induced declines in demand for oil, Exxon hit a new all-time high in early 2023. Exxon has a relatively low P/E ratio of 7.15 and a long-term https://g-markets.net/helpful-articles/bullish-engulfing-pattern-trading-strategy-guide/ track record of several decades of strong returns. It provides a dividend of 3.41% for its investors, and it’s unlikely to go under anytime soon. OXY went from a net loss of $346 million in the first quarter of 2021 to net income of $3.53 billion in the second quarter of 2022.

The oil industry faces san earnings decline, but the long-term outlook is healthy, according to analysts at Jefferies

The analyst expects that PSX is likely to generate free cash flows of approximately $16 billion from 2023 to 2025 and return around $10.5 billion to stockholders in the same period. As such, investors would be wise to keep a close eye on energy stocks moving forward. The drawdown of available shares has helped improve operating metrics for Diamondback that are measured on a per-share basis.

Cheniere has exhibited steady gains in revenues since the third quarter of 2020. In Q4 2022, the company’s revenues were up 39% year-over-year to $9.1 billion. LNG has benefitted from the rising price of natural gas globally, along with increasing exports to Europe in recent weeks. The total volume of gas exported in the fourth quarter was 600 trillion Btu, up from 540 trillion in the same period last year. Top-rated Jefferies analyst Lloyd Byrneis is sidelined on the stock with a Hold rating, but a $120 price target.

• The company has proved natural gas, oil, and NGL reserves of 21,148 billion cubic feet of natural gas equivalent.
• This means that when oil prices dip, the margins at companies like Suncor are hit much harder as a result.
• At Bankrate we strive to help you make smarter financial decisions.
• Still, recession risks linger, which could slow global oil demand.

With the outlook for oil stocks suddenly much more bullish, it seemed like a good time to see which S&P 500 exploration and production oil stocks get the highest recommendations from industry analysts. When it comes to oil stocks, you’ll have to understand that they’re volatile and subject to the swings in the price of the commodity itself. Which stock is a good choice for you depends on your investment objectives and risk tolerance. Some will prefer relatively stable companies with very high dividends, while others might choose aggressive, speculative companies that could double in price but might not pay much income. Do some research to understand the difference between the two, and consider speaking with a financial advisor so that you’re matched up with the right type of oil stock. A company’s free cash flow (FCF) is its remaining cash flow after capital expenditures.

It has beaten earnings estimates for four quarters in a row, and the stock has seen continued momentum nonetheless. Similar to Exxon, it has produced record profits in 2022, but even more so. Shell’s $18 billion second-quarter profit in 2022 was the largest in the company’s history. Here’s a short breakdown of each of the picks, along with their current price and market capitalization.

Understanding how oil supply and demand impacts oil makes it a reliable indicator of economic activity. When analysts and institutional investors forecast decreasing demand for oil, they bid down the price of crude oil. This in turn affects oil stocks which as we said tend to move with the market. These are the oil and gas penny stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.

Even so, that doesn’t mean there are few opportunities in the oil patch. Here’s a closer look at some of the top oil stocks and factors to consider before buying oil stocks. At the same time, oil companies have been raising regular dividends, paying special dividends and emphasizing share buybacks. If stock repurchases are sufficient to lower the share count, earnings per share will increase and potentially support higher share prices. The company is also involved in the convenience and mobility business, which manages the sale of fuels to wholesale and retail customers, convenience products, aviation fuels, and Castrol lubricants.