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Globe and Mail
16 hours ago
- Business
- Globe and Mail
3 Integrated Energy Stocks to Gain Despite Industry Vulnerability
The crude oil pricing environment is expected to experience significant volatility this year, which will negatively impact the exploration and production activities of integrated energy companies. A deceleration in oil production growth can create challenges, thereby constraining earnings from upstream operations. At the same time, the accelerating shift toward renewable energy is introducing greater uncertainty to the Zacks Oil and Gas Integrated International industry's prospects. This combination of factors suggests a challenging and softened industry environment that is expected to persist through at least the remainder of 2025. Among the companies in the industry that will probably survive the business challenges are Exxon Mobil Corporation XOM, Chevron Corporation CVX and Shell plc SHEL. About the Industry The Zacks Oil and Gas Integrated International industry covers companies primarily involved in upstream, midstream and downstream operations. These companies have upstream businesses in the United States (including prolific shale plays and the deepwater Gulf of Mexico), Asia, South America, Africa, Australia and Europe. Midstream operations of energy companies entail transporting oil, natural gas liquids and refined petroleum products. In downstream businesses, the firms buy raw crude to produce refined petroleum products. The companies' downstream activities involve chemical businesses that manufacture raw materials for making plastics. The integrated players are now gradually focusing on renewables, leading to the energy transition. The firms aim to lower emissions from operations and cut the carbon intensity of the products sold. 3 Trends Shaping the Future of the Industry Macroeconomic Volatility: The integrated energy sector is currently navigating a highly uncertain and challenging macroeconomic environment. Refining, renewable energy and chemical segments are particularly under pressure due to limited visibility into future market dynamics. Escalating trade tensions are compounding this uncertainty, raising concerns over potential economic slowdowns. Meanwhile, oil prices remain volatile, swayed by geopolitical risks and fluctuating OPEC+ production strategies. As a result, major integrated energy players are grappling with profitability challenges. Slowdown in Production Growth to Hurt Upstream Business: There has been a slowdown in oil production growth in the upstream businesses of integrated energy companies in the United States due to shareholder demands for a greater focus on returning capital rather than investing in production expansion. As production growth slows, output decreases, which can lead to reduced revenues. Since upstream operations depend heavily on volume to generate income, any stagnation in production growth has a direct and negative impact on their bottom line. Growing Demand for Renewables is Concerning: Governments, investors and stakeholders are placing growing emphasis on addressing climate change, leading to an increased demand for renewable energy. Consequently, the demand for products reliant on oil, natural gas and natural gas liquids is expected to decline, with solar and wind energy gaining prominence in the energy landscape. The integrated energy firms are adversely impacted by these trends as they are primarily engaged in the production and transportation of fossil fuels, such as oil, and the sale of refined petroleum products. Zacks Industry Rank Indicates Bearish Outlook The Zacks Oil and Gas Integrated International industry is part of the broader Zacks Oil - Energy sector. It carries a Zacks Industry Rank #189, which places it in the bottom 23% of the 245 Zacks industries. The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Before we present a few stocks that you may want to consider, let us take a look at the industry's recent stock market performance and valuation picture. Industry Lags S&P 500 & Sector The Zacks Oil and Gas Integrated International industry has underperformed the broader Zacks Oil - Energy sector and the Zacks S&P 500 composite over the past year. The industry has plunged 5.4% over this period compared with the S&P 500's growth of 17.3% and the broader sector's decline of 2.6%. One-Year Price Performance Industry's Current Valuation Since oil and gas companies are debt-laden, it makes sense to value them based on the Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA) ratio. This is because the valuation metric takes not just equity into account but also the level of debt. On the basis of the trailing 12-month EV/EBITDA, the industry is currently trading at 4.27X, lower than the S&P 500's 17.85X. It is also below the sector's trailing 12-month EV/EBITDA of 4.77X. Over the past five years, the industry has traded as high as 6.54X and as low as 2.75X, with a median of 4.11X. Trailing 12-Month Enterprise Value-to EBITDA (EV/EBITDA) Ratio 3 Integrated International Stocks to Watch Chevron: The company completed its $53-billion acquisition of Hess Corporation, thereby strengthening its upstream portfolio and obtaining a 30% interest in the highly valued Stabroek Block offshore Guyana. Chevron gains strategic access to one of the most prolific deepwater discoveries of the past decade, estimated to hold more than 11 billion barrels of recoverable oil. The acquisition also strengthens its position in the U.S. Bakken shale, the Gulf of Mexico and Southeast Asia. It currently carries a Zacks Rank #3 (Hold). The move comes as a turning point for Chevron as it is facing mounting pressure to replenish its reserves and strengthen free cash flow amid ongoing volatility in the oil markets. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Price and Consensus: CVX ExxonMobil: The company's acquisition of Pioneer Natural Resources expanded its production capabilities in the Permian Basin, one of the most profitable regions in the United States due to its inexpensive production costs. XOM boasts a strong portfolio of upstream assets, focused on oil-rich resources in the Permian Basin and offshore Guyana. Production costs in those assets are low. Therefore, the leading integrated energy major can overcome a collapse in oil and gas prices. Similar to its operations in the Permian, ExxonMobil boasts a robust project pipeline in offshore Guyana resources. It presently carries a Zacks Rank #3. Price and Consensus: XOM Shell: The company's acquisition of Pavilion Energy strengthens its LNG trading capabilities and positions itself for long-term growth in cleaner fuels. Shell's position as a major supplier of LNG should help the company meet the fuel's growing demand and improve its cash flow. Shell, with a Zacks Rank of 3, is targeting a 4-5% annual increase in LNG sales over the next five years and 1% annual production growth. Price and Consensus: SHEL 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Exxon Mobil Corporation (XOM): Free Stock Analysis Report Chevron Corporation (CVX): Free Stock Analysis Report
Yahoo
16 hours ago
- Business
- Yahoo
Progress in Trade Talks Supports Energy Demand and Crude Prices
September WTI crude oil (CLU25) today is up +0.73 (+1.12%), and September RBOB gasoline (RBU25) is down -0.0145 (-0.69%). Crude oil and gasoline prices today are mixed. Crude oil is finding support in signs of progress in trade talks, which could support economic growth and energy demand. Also, today's rally in the S&P 500 to a new record high shows confidence in the economic outlook that is bullish for energy demand and oil prices. Today's dollar strength and mixed US economic reports are limiting gains in crude prices. More News from Barchart Nat-Gas Prices Tumble as US Weather Forecasts Cool Crude Oil Prices Could Tick Up on Consumer Resilience. Here Are the Levels to Watch Before You Buy. Crude Prices Finish Slightly Lower on a Mixed EIA Inventory Report Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! Signs of progress in US trade deals are boosting crude prices. On Wednesday, the US and Japan agreed to a trade deal, and Bloomberg reported that the US and European Union were close to a trade deal. Today's US economic news was mixed for energy demand and crude prices. On the positive side, weekly initial unemployment claims unexpectedly fell -4,000 to a 3-month low of 217,000, showing a stronger labor market than expectations of an increase to 226,000. Conversely, the July S&P US manufacturing PMI fell -3.4 to a 7-month low of 49.5, weaker than expectations of 52.7. Weakness in the crude crack spread is bearish for crude prices. The crack spread today fell to a 2.5-week low, which discourages refiners from purchasing crude and refining it into gasoline and distillates. Oil prices have been undercut by expectations for Iraq to boost crude exports from its northern Kurdish region through the Iraq-Turkey pipeline, where oil exports have been halted since March 2023. The Iraqi government approved a plan for the semi-autonomous Kurdish region to resume oil exports. Kurdistan expects to supply Iraq's crude market with 230,000 bpd of crude once exports resume. Iraq is the second-largest oil producer in OPEC. Crude prices have underlying support from last Friday when the European Union approved fresh sanctions on Russian oil due to its aggression against Ukraine. The sanctions package includes cutting off 20 more Russian banks from the international payments system SWIFT, as well as restrictions imposed on Russian petroleum refined in other countries. A large oil refinery in India, part-owned by Russia's Rosneft PJSC, was also blacklisted. Additionally, 105 more ships in Russia's shadow fleet were sanctioned, pushing the number of sanctioned ships above 400. Concern about a global oil glut is negative for crude prices. On July 5, OPEC+ agreed to raise its crude production by 548,000 barrels per day (bpd) beginning August 1, exceeding expectations of a 411,000 bpd increase. Saudi Arabia also stated that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and penalize overproducing OPEC+ members, such as Kazakhstan and Iraq. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production by September 2026. On May 31, OPEC+ agreed to a 411,000 bpd increase in crude production for July, following the same 411,000 bpd hike for June. June crude production rose +360,000 bpd to a 1.5-year high of 28.10 million bpd. In a supportive factor for oil prices, Bloomberg reported on July 10 that OPEC+ is discussing a pause in further production increases from October, following its next monthly hike in September of 548,000 barrels. OPEC+ may be concerned about a slowdown in global oil demand in the second half of this year that could lead to a supply glut if the group keeps boosting production. The International Energy Agency said inventories have been accumulating at a rate of 1 million bpd and that the global crude oil market faces a surplus by Q4-2025 equivalent to 1.5% of global crude consumption. A decrease in crude oil held worldwide on tankers is bullish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -14% w/w to 66.31 million bbl in the week ended July 18. Wednesday's weekly EIA report showed that (1) US crude oil inventories as of July 18 were -8.6% below the seasonal 5-year average, (2) gasoline inventories were +0.2% above the seasonal 5-year average, and (3) distillate inventories were -18.5% below the 5-year seasonal average. US crude oil production in the week ending July 18 fell -0.8% w/w to 13.273 million bpd, modestly below the record high of 13.631 million bpd posted in the week of 12/6/2024. Baker Hughes reported last Friday that the number of active US oil rigs in the week ending July 18 decreased by -2 rigs to a new 3.75-year low of 422 rigs. Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.25-year high of 627 rigs reported in December 2022. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
a day ago
- Business
- Forbes
Crude Oil ‘s Seasonal And Technical Outlook
NEW YORK - APRIL 7: Traders work in the oil futures pit at the New York Mercantile Exchange April ... More 7, 2005 in New York City. (Photo by) The NYMEX launched the West Texas Light Crude oil contract in 1983. Soon, their price action, as well as that of the T-Bond and gold futures became a regular part of my analytical routine. This led to instructional presentations for oil traders in Singapore and London. WTI is now traded on the Chicago Mercantile Exchange (CME) which provided a 40-year history. Many crude oil traders use fundamental data to measure supply and demand in order to forecast prices. In my technical approach, I look at the actual futures price data as well as the volume and open interest to determine where prices are heading. Crude Oil Monthly This monthly chart goes back to early 2021 as the monthly DTS (created by my colleague Jerry A) generated a buy signal (see arrow) in January 2021. Crude oil prices traded higher until peaking in June 2023 after a high of $123.68. Crude oil had spent several months above the starc+ band, so it was in a high-risk buy area. The monthly sell signal came in August (see arrow) and prices subsequently declined $25 before a low in May of 2023. The new monthly buy was generated in July 2023 as crude oil closed back above its 20- month EMA. The rally terminated three months later as it acted like a bear market rally as crude oil failed to overcome the 50% resistance at $93.82. In 2024, crude oil prices drifted lower, and then in April of 2025, WTI closed below the support line A, at $65.41. The three-month rally from the low at $55.12 peaked at $78.40 and briefly moved above the yearly pivot at $74.94 (in purple), but was not able to close above it, which kept the yearly trend negative On the bottom of the chart is the Aspray Insight indicator, a derivation of the relative performance, developed by Jerry A. This indicator has been in a downtrend since late 2023, indicating that WTI was going to be weaker than the S&P 500. So far in 2025, WTI is down 8.9% year-to-date while the S&P 500 is up 7.9%. Crude Oil Weekly This weekly chart shows that the recent WTI move above the yearly pivot at $74.94 (in purple) reached or exceeded the weekly starc+ band before it turned lower. Below the chart is plotted the Seasonal Trend, which is calculated using the WTI data since 1984. Based on this data, WTI prices typically bottom on December 13th and then typically will top out on July 4th. It has always been my approach that the Seasonal Trend analysis should only be followed when it agrees with the technical outlook. The negative monthly analysis of crude oil and the current signs of failing rallies in the Energy Select (XLE) and SPDR S&P Oil & Gas Exploration (XOP) mean that August may be a tough month for oil prices and the oil stocks. A drop in crude oil or the energy ETFs below the July lows should confirm a new decline.
Zawya
a day ago
- Business
- Zawya
Oman oil price reaches $70.52 per barrel
MUSCAT: The official price of Oman oil for September delivery on Wednesday reached $70.52. The price of Oman oil decreased by 18 cents compared to Tuesday's price of $70.70. The monthly average price of Omani crude oil for July delivery reached $63.62 per barrel, a decrease of $4.25 compared to the price for June delivery. Meanwhile, international oil prices fell for the fourth consecutive session on Wednesday, as investors assessed trade developments including a US tariff deal with Japan ahead of a US stocks data announcement. Brent crude futures were down 50 cents, or 0.7%, at $68.05 a barrel as of 11:19 GMT. US West Texas Intermediate crude futures were down 47 cents, or 0.7%, at $64.78 per barrel. Both benchmarks lost about 1% in the previous session after the EU said it was considering countermeasures against US tariffs. US President Donald Trump said on Tuesday that the US and Japan had struck a trade deal that included a 15% tariff on US imports from Japan. 'The slide (in prices) of the past three sessions appears to have abated but I don't expect much of an upward impetus from news of the US-Japan trade deal as the hurdles and delays being reported in talks with the EU and China will remain a drag on sentiment', said an analyst. — Agencies MUSCAT: The official price of Oman oil for September delivery on Wednesday reached $70.52. The price of Oman oil decreased by 18 cents compared to Tuesday's price of $70.70. The monthly average price of Omani crude oil for July delivery reached $63.62 per barrel, a decrease of $4.25 compared to the price for June delivery. Meanwhile, international oil prices fell for the fourth consecutive session on Wednesday, as investors assessed trade developments including a US tariff deal with Japan ahead of a US stocks data announcement. Brent crude futures were down 50 cents, or 0.7%, at $68.05 a barrel as of 11:19 GMT. US West Texas Intermediate crude futures were down 47 cents, or 0.7%, at $64.78 per barrel. Both benchmarks lost about 1% in the previous session after the EU said it was considering countermeasures against US tariffs. US President Donald Trump said on Tuesday that the US and Japan had struck a trade deal that included a 15% tariff on US imports from Japan. 'The slide (in prices) of the past three sessions appears to have abated but I don't expect much of an upward impetus from news of the US-Japan trade deal as the hurdles and delays being reported in talks with the EU and China will remain a drag on sentiment', said an analyst. — Agencies
Yahoo
2 days ago
- Business
- Yahoo
Crude Prices Finish Slightly Lower on a Mixed EIA Inventory Report
September WTI crude oil (CLU25) on Wednesday closed down -0.06 (-0.09%), and September RBOB gasoline (RBU25) closed up +0.0187 (+0.90%). Crude oil and gasoline prices settled mixed on Wednesday. A build in crude supplies at Cushing, the delivery point for WTI futures, for a third consecutive week, undercut oil prices. Losses in crude were contained, and gasoline prices rose after weekly EIA crude inventories and gasoline supplies fell more than expected. Also, Wednesday's decline in the dollar index (DXY00) to a 2-week low was supportive of energy prices. Additionally, the action by the US and Japan to agree on a trade agreement eases trade concerns and supports energy demand. More News from Barchart Array Technologies (ARRY) Just Flashed a Statistically Significant Reversal Signal for Options Traders Forecasts for Milder US Weather Weigh on Nat-Gas Prices Crude Oil Price Fall on Concern About Energy Demand Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! Wednesday's US economic news was negative for energy demand and crude prices after Jun existing home sales fell -2.7% m/m to a 9-month low of 3.93 million, weaker than expectations of -0.7% to 4.00 million. Weighing on crude is the outlook for Iraq to boost crude exports from its northern Kurdish region through the Iraq-Turkey pipeline, where oil exports have been halted since March 2023. The Iraqi government approved a plan for the semi-autonomous Kurdish region to resume oil exports. Kurdistan expects to supply Iraq's crude market with 230,000 bpd of crude once exports resume. Iraq is the second-largest oil producer in OPEC. Crude prices have carryover support from last Friday when the European Union approved fresh sanctions on Russian oil due to its aggression against Ukraine. The sanctions package includes cutting off 20 more Russian banks from the international payments system SWIFT, as well as restrictions imposed on Russian petroleum refined in other countries. A large oil refinery in India, part-owned by Russia's Rosneft PJSC, was also blacklisted. Additionally, 105 more ships in Russia's shadow fleet were sanctioned, pushing the number of sanctioned ships above 400. Concern about a global oil glut is negative for crude prices. On July 5, OPEC+ agreed to raise its crude production by 548,000 barrels per day (bpd) beginning August 1, exceeding expectations of a 411,000 bpd increase. Saudi Arabia also stated that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and penalize overproducing OPEC+ members, such as Kazakhstan and Iraq. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production by September 2026. On May 31, OPEC+ agreed to a 411,000 bpd increase in crude production for July, following the same 411,000 bpd hike for June. June crude production rose +360,000 bpd to a 1.5-year high of 28.10 million bpd. In a supportive factor for oil prices, Bloomberg reported on July 10 that OPEC+ is discussing a pause in further production increases from October, following its next monthly hike in September of 548,000 barrels. OPEC+ may be concerned about a slowdown in global oil demand in the second half of this year that could lead to a supply glut if the group keeps boosting production. The International Energy Agency said inventories have been accumulating at a rate of 1 million bpd and that the global crude oil market faces a surplus by Q4-2025 equivalent to 1.5% of global crude consumption. A decrease in crude oil held worldwide on tankers is bullish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -14% w/w to 66.31 million bbl in the week ended July 18. Wednesday's weekly EIA report was mixed for crude and products. On the negative side, EIA distillate stockpiles unexpectedly rose +2.9 million bbl versus expectations of a -1.25 million bbl draw. Also, crude supplies at Cushing, the delivery point of WTI futures, rose by +455,000 bbl. On the positive side, crude inventories fell -3.17 million bbl, a larger draw than expectations of 1.5 million bbl. Also, EIA gasoline supplies fell -1.7 million bbl, a larger draw than expectations of a -200,000 bbl draw. Wednesday's weekly EIA report showed that (1) US crude oil inventories as of July 18 were -8.6% below the seasonal 5-year average, (2) gasoline inventories were +0.2% above the seasonal 5-year average, and (3) distillate inventories were -18.5% below the 5-year seasonal average. US crude oil production in the week ending July 18 fell -0.8% w/w to 13.273 million bpd, modestly below the record high of 13.631 million bpd posted in the week of 12/6/2024. Baker Hughes reported last Friday that the number of active US oil rigs in the week ending July 18 decreased by -2 rigs to a new 3.75-year low of 422 rigs. Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.25-year high of 627 rigs reported in December 2022. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. 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