Analysts are now bullish on oil and gas stocks

We recently compiled a list Top 10 Oil and Gas Stocks Worth Buying, According to Analysts. In this article, we’ll look at where Occidental Petroleum Corporation (NYSE:OXY) stands compared to other oil and gas stocks worth buying.

Although renewable energy sources are gaining more attention, demand for oil and gas remains high, driven by the growing energy needs of developed and developing countries. However, the industry is highly volatile, with profits and losses often dependent on minor changes in demand or strategic moves by oil states such as Saudi Arabia and Russia, whose agendas may conflict with those of publicly traded oil companies. Imbalances in supply and demand often cause large price fluctuations, as evidenced in early 2022 when Russia’s invasion of Ukraine pushed oil prices into triple digits for the first time in years.

State of the oil and gas market

Global oil prices have retreated from early October highs, with the market’s focus shifting from supply risks to concerns about the state of the global economy, sluggish demand and ample supply. After breaking above $80 a barrel in early October, Brent crude futures fell to around $72 a barrel by mid-November as fears of an Israeli attack on Iran’s energy infrastructure subsided. Meanwhile, global oil supplies are growing steadily. Following the US elections in early November, the US is expected to lead growth in non-OPEC+ oil supplies, providing 1.5 million barrels per day (mb/d) in both 2024 and 2025, along with an increase production in Canada, Guyana and Argentina. Brazil, which has been beset by operational problems and disruptions, is projected to increase production by 210,000 barrels per day (bpd) by 2025, reaching 3.7 million bpd when operational. will introduce new capacity exceeding 800 thousand barrels per day.

On the other hand, the International Energy Agency’s (IEA) World Energy Outlook 2024 forecasts that global oil demand will increase by about 2.6 million barrels per day from 2023 to 2030 before peaking, driven by increased adoption of electric vehicles and increasing fuel efficiency. Petrochemicals are expected to overtake road transport as the main driver of oil demand growth. By 2050, the IEA forecasts that global oil demand will average 93.1 million barrels per day, 4.3 million barrels per day lower than its preliminary estimate under the Stated Energy Policy Scenario (STEPS). The biggest declines are expected in aviation and shipping, with demand falling by 2.7 million bpd as sustainable aviation fuels gain traction and hydrogen-based alternative fuels are increasingly used in shipping.

Oil policy of the USA and China

Chinese refineries processed 4.6% less oil in October compared with the same period last year, according to National Bureau of Statistics data released Nov. 15, reflecting plant closures and lower output among smaller independent refiners. growth has slowed and persistent weakness in the real estate sector has heightened investor concerns about the economic health of the world’s largest crude oil importer.

Compounding these problems, US President-elect Donald Trump has advocated reducing regulation of the oil sector to increase US production, which could put downward pressure on oil prices. However, with U.S. oil production already near record levels, questions are being raised about the industry’s ability to continue ramping up production. Even if they could, companies may hesitate because ramping up production could lead to lower prices, potentially impacting profits and shareholder returns. Most notably, however, Trump has vowed to revoke China’s most-favored-nation trade status and impose tariffs exceeding 60% on Chinese imports, far beyond the levels imposed during his first term. When crude oil is included, it could reduce profits for U.S. refineries that rely on oil imports. It could also harm U.S. oil and refined product exports if other countries respond with retaliatory tariffs. In light of this, economists at Goldman Sachs Research slightly lowered their 2025 growth forecast for China, attributing the adjustment to expected tariff increases under the Trump administration. Chief economist Jan Hatzius also warned that a more significant downgrade could follow if the trade conflict escalates.

Our methodology

In this article, we analyzed screeners and ETFs to identify oil and gas stocks with an average share price upside of 15% or more as of market close on November 18, 2024. We’ve ranked the top 10 stocks in ascending order of value. potential for growth in the average share price. In addition, we have included hedge fund sentiment for each stock as of the third quarter of 2024 to offer readers greater insight.

Why are we interested in the stocks that hedge funds invest in? The reason is simple: Our research has shown that we can beat the market by emulating the top stocks of the top hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (see more details here).

Oil rigs in the background, several workers in the foreground, highlighting the company’s oil and gas production activities.

Occidental Petroleum Corporation (NYSE:OXY)

Average analyst price target: $63.65.

Growth potential: 25.02%

Number of hedge fund holders as of Q3: 71

Occidental Petroleum Corporation (NYSE:OXY), based in Houston and incorporated in Delaware, is a leading American company focused on hydrocarbon exploration in the United States and the Middle East. The company also operates petrochemical production facilities in the United States, Canada and Chile.

On November 14, Susquehanna maintained a positive rating on Occidental Petroleum Corporation (NYSE:OXY) but revised its share price target downward from $77 to $65. The adjustment came after the company’s third-quarter results beat expectations for both production and earnings per share. Notably, the company reported significant debt reduction: Occidental Petroleum Corporation (NYSE:OXY) paid off $4 billion, achieving nearly 90% of its short-term debt reduction goal of $4.5 billion, just two months after closing its acquisition of CrownRock. .

Occidental Petroleum Corporation (NYSE:OXY) plans to maintain a five-rig program at its CrownRock assets through 2025, a move expected to support mid-single digit production growth. The Company also seeks to maintain flexibility in capital expenditures across its broader portfolio of onshore U.S. operations while adjusting to changes in commodity prices. With the addition of CrownRock assets and strong production from new wells in the Permian Basin, Occidental Petroleum Corporation (NYSE:OXY) expects to reach production levels of 1,450 thousand barrels of oil equivalent per day (Mboe/d) in the fourth quarter.

General OXY ranks 7th on our list of oil and gas stocks that analysts think are worth buying. While we recognize OXY’s potential as an investment, our belief is that some AI stocks are better positioned to deliver higher returns and do so in a shorter time frame. If you’re looking for an AI stock that has more promise than OXY but is trading at less than 5 times its earnings, check out our report on cheapest AI stocks.

READ MORE: 8 Best Wide-Moat Stocks to Buy Now And BlackRock’s 30 Most Important AI Stocks.

Disclosure: none. This article was originally published on Insider Monkey.