Last week, WTI crude prices fell by 10% to around $80 per barrel. Shell’s Zydeco pipeline disruption reduced capacity. This caused shale barrels to move to Oklahoma for storage.
Investors who missed out on the energy rally of 2022 have three stocks to consider buying. Exxon (XOM) will benefit as china reopens its economy and ends its Covid lockdown policies. The low strategic petroleum reserves (SPR) will put upward pressure on oil prices. And the European Union’s embargo on Russian crude strengthens the macro outlook for the energy market.
ConocoPhillips (COP), like Exxon, traded at a 52-week high before pulling back slightly. COP stock trades at a price-to-earnings ratio of 9.2 times. Chevron (CVX) trades at a 10.4x P/E. The company’s Permian production is around 700,000 barrels a day, up by around 15% compared to its first three quarters of last year.
CVX stock is a compelling long-term investment because its production is growing. It did not need to bring its frac wells online when production demand fell. Instead, it increased its drilling activity, helping its inventory growth.
Your Takeaway
The recent pullback in energy stocks is yet another chance for investors to build their position. The winter months will create an upward demand for heating. This suggests that investors should not ignore the energy sector.
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