Oil prices are on the move again. Brent crude recently hit $97 a barrel in September – its highest in 10 months. What’s driving this surge? And what does it mean for investors?
Several powerful forces have collided to light oil’s fuse:
This supply squeeze coincides with rising consumption – a recipe for price spikes.
What’s more, spare production capacity has evaporated. Any supply disruption could cause prices to soar higher.
And don’t forget about ever-present geopolitical tensions. These guarantee risky, premium-fueled volatility.
The kicker? Experts see demand growth outpacing sluggish supply expansion. This points to widening shortfalls in oil markets.
Brace yourself – this unbalanced dynamic may ignite the next leg up in oil’s endless rollercoaster ride.
Some projections estimate Brent crude could top $120 a barrel in the medium term – and stay elevated for the long haul.
Overall, oil has climbed back into a bullish stance. And savvy investors should take notice. The next price eruption could already be rumbling beneath the surface.
Today, we’ll take a look at three promising oil stocks poised to potentially benefit from the current upswing in the sector.
Schlumberger Limited is at the forefront of the oilfield services industry, providing technology and services critical for oil and gas exploration and production.
With a strong presence in key markets and a reputation for technological innovation, Schlumberger is well-positioned to capitalize on the increasing demand for energy and the complexities of modern hydrocarbon development.
Schlumberger has demonstrated strong financial performance, with revenues and net profits rising consistently over the last three quarters.
Revenue has grown from $7.73 billion to $8.31 billion, marking an average quarterly increase of 3.5%. Net profit has shown even more robust growth, increasing from $934 million to $1.12 billion, which translates to an impressive average quarterly growth rate of 8.8%.
This upward trend underscores Schlumberger's operational excellence and its ability to adapt to the market's demands while maintaining profitability.
Williams Companies stands as a resilient player in the midstream oil and gas industry, navigating a volatile energy market with strategic agility.
The company's consistent delivery of operational excellence, particularly in project execution and commercial ventures, aligns it well with the burgeoning demand for natural gas. Its recent accomplishments and development of key infrastructure projects, such as the Transco pipeline's Regional Energy Access, demonstrate its commitment to growth and efficiency.
Williams Companies has reported an upward trajectory in financials, with revenue climbing from $2.48 billion to $2.55 billion over the last two quarters, reflecting a 3.0% average quarterly increase. Net profit has seen an even more substantial rise, with a 29.7% average quarterly increase from $460.0 million to $654.0 million.
This performance highlights the company's ability to enhance profitability amidst challenging market conditions.
ConocoPhillips is an American multinational corporation that explores, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids.
The company emerges as a robust contender in the energy sector with a strategic focus on cost-efficient operations and shareholder returns.
Its commitment to a high-grade portfolio and disciplined M&A strategy, coupled with its consistent operational performance, positions it well in a consolidating industry. The acquisition of Surmont reflects a targeted approach to asset management, enhancing its 10-year plan with low-decline and low-capital intensity assets.
ConocoPhillips' diversification and advancement in international markets, particularly in LNG, are pivotal to its sustained growth amidst fluctuating oil prices and global demand dynamics.
ConocoPhillips reported Q3 2023 earnings of $2.8 billion, marking a decrease from Q3 2022 earnings of $4.5 billion. Despite the downturn, the company showed resilience by announcing a 14% increase in its quarterly dividend to $0.58 per share, signaling confidence in its financial health.
Operational highlights include record production for the third consecutive quarter, with production of 1.81 million barrels of oil equivalent per day.
The company's strategic moves, like the Surmont acquisition and advancements in international LNG projects, have poised it for continued production and revenue growth.
With fast-increasing oil prices as well as the supply-demand constraint in the energy sector, the stated companies, namely Schlumberger Limited (ticker: SLB), Williams Companies (ticker: WMB), and ConocoPhillips (ticker: COP) provide great opportunities for the short to medium term. These companies also have solid financial backgrounds supported by current macroeconomic conditions.
For investors looking to dive into the current bullish brigade in the sector, put these on your radar.
Q: Why is the oil market facing tighter supply currently?
A: Key factors like production cuts, diminished strategic reserves, insufficient investment, and geopolitics have constrained supply growth while demand rebounds post-pandemic.
Q: What makes Schlumberger well-placed to benefit from the oil boom?
A: Schlumberger has a strong core business, global footprint, tech innovation, and key strengths in areas like offshore and international markets with increasing activity.
Q: How has Williams Companies demonstrated resilience in the oil and gas midstream sector?
A: By efficiently executing projects, signing long-term agreements, and strategic expansions of infrastructure to accommodate future energy demand growth.
Q: What are some signs of continued strength for ConocoPhillips despite its recent earnings decline?
A: Achieving production records, raising dividends, bolstering its portfolio through acquisitions, and progress in global LNG projects.