The partial reopening of every U.S. State, plus a relaxing of the lockdown in much of Europe gave energy prices a strong lift. Energy stocks rose after crude oil prices topped the $33 range late last week.
Lower domestic crude supplies led to a further stabilization in oil prices. Imports and production fell, while storage availability is improving.
Investors have a few energy companies to continue holding.
Marathon Petroleum (NYSE:MPC) is already nearly double from the March 2020 lows. A combination of higher demand and a re-start of its Galveston Bay refinery on June 1 will lift revenue. In the first quarter, the company booked a $9.2-billion loss. This included a $12.4-billion impairment charge.
To lower future losses, it cut its capital spending by $1.4 billion for the year.
MPC’s $2.5 billion senior notes sale in April and another $1 billion in its credit facility strengthened its liquidity and eased investor concerns. Now that energy prices are on the mend, MPC may ease operating expense cuts and invest back in the business.
Energy Transfer (NYSE:ET) is another company to watch. It reported an $855-million loss that included a $1.3 billion goodwill writedown. Its distribution coverage ratio was 1.72 times. Investors should continue to consider this stock for the dividend yield.
