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Oil Prices Settle at Above $74: 4 Energy Stocks to Buy Now

Nitish Marwah
Updated
Oil prices have found support from declining U.S. crude inventories.

Per the Energy Information Administration’s (EIA) Aug 22 report, U.S. crude inventories dropped by 5.8 million barrels for the week ending Aug 17. This resulted in crude oil price rising to a two-week high to settle above $74 a barrel. Further, crude-oil futures also increased for the fifth session on the trot on Wednesday.

The surge in crude prices was partly supported by prospects of a reduction in oil exports from Iran due to new and stricter embargos on the country by the United States. Under circumstances where oil prices are likely to remain high, investing in stocks of oil companies seems prudent.

Oil Settles at 2-Week High

A wider-than-expected drop in U.S. crude inventories didn’t just support oil prices in America. They also served to negate the global decline in oil prices due to escalating trade war tensions between the United States and China. West Texas Intermediate oil for October delivery rose 3.1% to $67.86 to its highest level since Aug 7. Oil prices have now increased for five straight sessions. Notably, October Brent crude gained 3% to finish at $74.78— its highest level since Jul 30.

Factors That Boosted Oil Prices

Despite a huge increase in per day crude production, crude oil prices have rallied in the past few sessions. Such a rally stems primarily from anticipation that Iran would be forced to curtail its oil imports due to the latest sanctions that the United States has imposed on the middle eastern country. Oil companies in Europe have already started cutting their purchases from Iran. Under such circumstances, global oil supplies might reduce by approximately 1.5 million barrels a day.

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Also pushing oil prices higher were comments from President Donald Trump regarding Fed Chief Jerome Powell’s stance on rate hikes. Trump openly criticized Powell’s approach stating that he was “not thrilled” about it. This led to weakness in the greenback, which made oil even cheaper to buyers outside the United States.

4 Hot Choices

Crude oil has rallied consecutively for multiple sessions in the past few days. Oil prices have found support from declining U.S. crude inventories, anticipations of a fall in Iran’s oil exports and a weakening dollar. This makes oil stocks a hotbed for money.

In this context, we have selected four stocks that are expected to gain from these factors. These four stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Helix Energy Solutions Group, Inc. HLX is a provider of specialty services to offshore energy industries in Brazil, the Gulf of Mexico, North Sea, the Asia Pacific, and West Africa regions.

The company is based out of Houston, TX and sports a Zacks Rank #1. The expected earnings growth rate for the current year is more than 200%. The Zacks Consensus Estimate for the current year has improved 18.8% over the past 60 days.

Ecopetrol S.A. EC is the owner and operator of an integrated oil and gas company. It engages in extraction, collection, treatment, storage and pumping or compression of hydrocarbons.

This Zacks Rank #1 company is based out of Bogota, Columbia. The expected earnings growth rate for the current year is 90.83%. The Zacks Consensus Estimate for the current year has improved 33.3% over the past 60 days.

Northern Oil and Gas, Inc. NOG engages in acquisition, exploration, development and production of crude oil and natural gas properties.

The company is based out of Minnetonka, MN and carries a Zacks Rank #2. The expected earnings growth rate for the current year is more than 200%. The Zacks Consensus Estimate for the current year has improved 36.1% over the past 60 days.

Eclipse Resources Corporation ECR engages in acquiring and developing oil and natural gas properties in the Appalachian Basin.

This Zacks Rank #1 company is based out of State College, PA. The Zacks Consensus Estimate for the current year has improved 75% over the past 60 days.

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Ecopetrol S.A. (EC) : Free Stock Analysis Report
 
Helix Energy Solutions Group, Inc. (HLX) : Free Stock Analysis Report
 
Northern Oil and Gas, Inc. (NOG) : Free Stock Analysis Report
 
Eclipse Resources Corporation (ECR) : Free Stock Analysis Report
 
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