3 Oil Stocks Worth a Watch This October
Oil stocks saw robust gains amid the bear market of 2022. While inflation took a toll on consumer outlays, it helped the price of crude oil scale upward.
It’s been, however, a different story this year. For most of 2023, crude oil prices have fallen, especially last week when prices recorded their largest weekly drop since March.
A higher interest rate environment, and subsequently its impact on global oil demand resulted in a decline in the price of crude oil (read more: Fed Anticipates Higher Rates for Longer: 5 Big Winners).
But recently crude prices reversed last week’s downward trend and moved northward amid Middle East tensions that raised concerns about the outlook for crude supply.
Late Sunday, oil futures opened strongly, with the West Texas Intermediate (WTI) crude for November delivery increasing 4.4% to $86.39 a barrel, while the December Brent crude was up 3.2% at $88.11 a barrel, citing a MarketWatch article.
Hamas, the Palestinian militant group, backed by Iran, attacked Israel early Saturday, resulting in many casualties. Israel retaliated and pounded Gaza.
But it’s the Iranian government’s involvement in the conflict, which is bearing upon the oil market. After all, the United States is now widely expected to implement sanctions on Iran’s oil exports leading to a global demand-supply disparity.
Earlier, major oil producers including Russia and Saudia Arabia had already decided to curb the production of oil by a combined 1.3 million barrels per day (bpd) till the end of 2023.
On the other hand, the Organization of the Petroleum Exporting Countries expects the demand for oil across the globe to stay vigorous. This rise in demand amid tighter supply conditions will surely push oil prices even higher worldwide.
The increase in oil prices should bode well for oil majors like Chevron Corporation CVX. The company’s CEO recently predicted oil prices to jump to $100 a barrel this year.
The rise in oil prices will help improve the company’s financial performance in the fourth quarter, and increase cash flow that can help Chevron increase its investments in renewables research.
The Zacks Consensus Estimate for its current-year earnings has moved up 3.3% over the past 60 days. The company’s expected earnings growth rate for next year is 10.7%. Its shares have gained 33.5% over the past five-year period. CVX, presently, has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Meanwhile, oil exploration and production companies such as Granite Ridge Resources, Inc. GRNT and Viper Energy Partners VNOM are well-poised to see their profit margins improve amid the oil price rally.
The Zacks Consensus Estimate for GRNT’s current-year earnings has moved up 15.7% over the past 60 days. The company’s expected earnings growth rate for next year is 11.5%. GRNT presently has a Zacks Rank #1.
Similarly, the Zacks Consensus Estimate for VNOM’s current-year earnings has moved up 31.9% over the past 60 days. The company’s expected earnings growth rate for the next quarter is 57.1%. VNOM presently has a Zacks Rank #2 (Buy).
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Chevron Corporation (CVX) : Free Stock Analysis Report
Viper Energy Partners LP (VNOM) : Free Stock Analysis Report
Granite Ridge Resources, Inc. (GRNT) : Free Stock Analysis Report
