OIL STOCKS: Top Companies, Prices & Best Stocks to Buy

Over the previous year, the price of crude oil fluctuated wildly. Oil reached a 14-year high of $120 per barrel in the aftermath of Russia’s invasion of Ukraine, but prices have steadily plummeted below $80 per barrel since then. The rise benefited Big Oil handsomely. In 2022, the five biggest oil firms that are publicly traded made a combined total of about $200 billion in profits, which led to a rise in the value of their stocks. However, now that the boom is firmly in the rearview mirror, picking the best oil stock bets is more difficult. Further in this blog post, we will explain what oil stocks mean and also discuss oil stocks companies, the price, the best oil stocks, and cheap oil stocks to buy right now.

Oil Stocks

It used to be easy to decide to buy oil stocks. Because the world’s population is growing and the economy is becoming more globalized, it takes a lot of fossil fuels to heat homes, move goods across the ocean, and power jet setters that fly all over the world.

The oil industry plays an essential role in the economy of the entire world. They are a source of fuel for both transportation and power generation. In addition, they are a source of the fundamental components of petrochemicals, which are the building blocks for items such as plastics, rubber, and fertilizer. Nevertheless, the oil business is characterized by high levels of competition and instability.

Small changes in demand or acts by petrostates like Saudi Arabia and Russia, whose interests might not align with those of publicly traded oil and gas businesses, can create enormous swings in earnings and losses for the industry. Oil supply-demand mismatches can cause large price movements. For the first time in years, crude oil prices reached triple digits after Russia invaded Ukraine in 2022. This had not happened in a while.

In addition, Investors have to consider climate change’s impact on the oil and gas industries’ long-term prospects. Energy is moving toward renewable sources. Despite this, the oil patch has opportunities.

How To Invest in Oil Stocks

Due to the cyclical and unpredictable nature of the industry, investing in oil stocks can be dangerous. While specific industrial segments carry their own unique set of hazards, macroeconomic variables like economic growth, geopolitics, and capital allocation can have an impact on the sector as a whole.

Oil prices are significantly influenced by OPEC, a cartel of oil-exporting countries that coordinates oil policies. OPEC has the power to significantly alter oil prices by changing supply. However, independent oil producers can also influence pricing by deciding how to allocate their capital in a way that affects supply.

Oil Stocks Companies

Torm plc, Teekay Tankers, and Scorpio Tankers are three oil and gas companies whose stocks have done well over the past year. Even though oil prices have gone down a lot from their highs almost a year ago, the share of oil stocks has gone up by well over 100% in the past year. This is a lot more than the 9% drop in the Russell 1000 Index, so these companies are doing very well. The following are oil stocks companies.

#1. Torm Plc

Based in the United Kingdom, TORM is a pure-play tanker company that ships fuel all over the world.

#2. Teekay Tankers Ltd

Teekay Tankers is a shipping and logistics company with a fleet of 50 tankers based in Bermuda. Due to never-before-seen high ship rates, revenue in the fourth quarter of 2022 was double what it was the year before. The year before, they lost $40 million, but this year they made $146 million.

#3. Scorpio Tankers Inc

Based in Monaco, Scorpio Tankers is a shipping company that moves oil products. It owns or rents 113 ships right now.

#4. Obsidian Energy Ltd

Based in Alberta, Canada, Obsidian Energy explores, develops, and produces petroleum resources there. This oil stock company disclosed its fourth-quarter and full-year earnings on February 23. When compared to Q4 2021, production revenue increased by 38%, while net income increased 29-fold. Strong funds from operations (FFO), greater reserve and commodity values, and an enormous rise in net income were all contributing factors.

#6. Vital Energy

Vital Energy is a corporation that focuses on the Permian Basin in West Texas for its oil and natural gas exploration and development. In January 2023, the firm changed its name from Laredo Petroleum, Inc., to Vital Energy. In the fourth quarter of 2022, the company’s net income decreased by 45% as a result of lower average natural gas prices and worse sales volume.

#7. Frontline Plc

Frontline is a crude oil shipping company with a fleet of 70 ships, based in Bermuda. Due to a sharp increase in demand from China and the use of larger crude carriers, net income in the fourth quarter of 2022 increased by a factor of 12 to $240 million, the highest level since 2008.

#8. The Permian Basin Royalty

The Permian Basin Royalty Trust owns interests in Texas properties that produce oil and natural gas liquids (NGLs). Simmons Bank serves as the Permian Basin Royalty Trustee. Due to a rise in oil and gas production, the trust declared a monthly cash dividend for March 2023 of about 2.4 cents per unit, which was less than the previous month.

Oil Stocks Price

In the last ten years, oil stocks price has gone up and down like a roller coaster, which most market players probably didn’t enjoy. During this time, there has been a lot of instability and two sharp crashes. The Great Recession and the financial crisis were both linked to a crash in 2008. The second may still be ongoing: oil prices have dropped from more than $100 per barrel in mid-2014 to roughly $30 per barrel recently.

Recent drops in oil stocks price have been similar to drops in oil prices. This is something that has been talked about a lot in the financial news. On the surface, it seems strange that oil prices and stock prices tend to go down together. Most of the time, a drop in oil costs is thought to be good for the economy, at least for oil importers like the U.S.

One possible reason why oil prices and stocks price tend to move in the same direction is that both are responding to a drop in global aggregate demand, which hurts both company profits and oil demand. An article in the Wall Street Journal described it this way: “Oil and stock markets have moved in lockstep this year, a rare coupling that highlights fears about global economic growth.”

In this post, we first show that there is a positive relationship between stock prices and oil prices and that this has been going on for a long time. Then, we test the idea that the link between oil stocks and aggregate demand can be explained by changes in aggregate demand. We discover that there is an underlying demand element responsible for a large portion of the positive connection, and if we also take changes in market risk preferences into account, we can account for even more. But even with these two things in mind, a big part of the link between oil and stocks is still hard to explain.

Best Oil Stocks to Buy Right Now

There are many oil stocks to choose from. They range from oil companies that only do exploration and production (E&P), pipeline companies, service providers, and refiners to oil companies that do a little bit of everything (integrated oil majors). This gives buyers a lot to choose from. However, some oil stocks stand out as the best in the sector. The following are the best oil stocks to buy right now.

#1. ConocoPhillips

ConocoPhillips is a global E&P giant. It finds and produces oil and gas in over a dozen nations. It bought Concho Resources and Shell’s assets in that low-cost, oil-rich region. With average prices of $40 per barrel and many of its resources even cheaper, it can generate tons of cash flow in practically any oil market condition. In the coming years, ConocoPhillips aims to return a major percentage of its free cash flow to investors due to oil demand uncertainty. It will repurchase shares, pay a growing dividend, and return excess cash.

Finally, its top-tier balance sheet complements its low-cost portfolio. ConocoPhillips has one of the top credit ratings in the E&P sector due to its low leverage ratio and large cash reserves. These make it one of the safest E&P investments.

#2. Devon Energy

Devon Energy is an E&P company that focuses on the U.S. It has businesses in a number of oil-rich basins where costs are low. Due to the company’s diversity, it can produce a large quantity of natural gas and oil at low prices, allowing it to make a lot of money.

In 2021, the company was the first in its industry to offer a fixed-plus-variable payout structure. It gives up to 50% of its quarterly cash flow that is left over after paying its fixed dividends and capital costs as variable dividends. Devon uses the rest of its extra cash to improve its financial standing and buy back shares.

Devon’s dividend plan makes it a good choice for investors who want to make money. They’ll get a steady base income that won’t change as the price of oil goes up and down, and they might get a lot of money when prices are high.

Cheap Oil Stocks

These are the minor oil and gas stocks with cheap trailing 12-month price-to-earnings (P/E) ratios to buy right now. A low P/E ratio indicates that you are paying less for every dollar of profit made because earnings can be distributed to shareholders as dividends and buybacks. The following are cheap oil stocks.

#1. Ring Energy Inc.

Ring Energy is an independent oil and gas development company that buys and develops properties in the Mid-Continent and Permian Basin areas of the U.S. In June 2022, crude oil prices fell, and so did the price of Ring shares. In the most recent quarter, earnings went down because of a loss on a commodity swap.

#2. Gran Tierra Energy, Inc.

Based in Canada, Gran Tierra operates in South America as an oil and gas exploration and production firm. In the last quarter, sales of oil went up a lot, so earnings per share (EPS) went up more than three times. This is among the right oil and gas stocks to buy.

#3. PetroTal Corp

PetroTal Corporation is a Canadian oil and gas exploration and production firm. It owns 100% of the oil field in Peru called Bretana. For the fourth quarter of 2022, the realized sale prices went up, which was one reason why net income per share went up by four times.

Is It Safe to Invest in Oil Stocks?

Oil stocks are risky because the industry is cyclical. Economic development, diplomacy, and spending can affect the entire sector, even if each part has its own hazards.

How to Invest in Oil Stock?

By buying stocks in the right oil companies like Exxon Mobil or BP, you can buy oil in a roundabout way. This plan is the easiest for investors who have done it before because it’s the same as buying shares in any sector.

Can You Make Money in Oil Stocks?

Oil and gas stocks can make a lot of money from share price increases and dividends when oil and gas prices are high. As the price of crude oil goes up, oil companies tend to make a lot of money.

What Stocks Go Up When Oil Goes Down?

Consumer discretionary: This industry group consists of companies operating in retail, travel, entertainment, and dining. When oil prices go down, people look for ways to spend the money they saved on gas. This helps these businesses indirectly.

What Makes Oil Stocks Go Up?

The price of oil is based on how much demand there is for products made from it. Prices may rise or fall during an economic boom due to increased buying or production.