U.S. oil prices experienced an upward surge on Thursday following a weekly report from the Energy Information Administration (EIA), revealing a significant reduction in supplies. The International Energy Agency’s (IEA) robust demand growth forecast for 2024, coupled with escalating tensions in the Middle East, provided additional support to the commodity.
On the New York Mercantile Exchange, WTI crude futures witnessed a gain of $1.52, equivalent to 2.1%, closing at $74.08 per barrel yesterday.
Analysts posit that current oil levels below $75 present a favorable opportunity for long-term-oriented market participants to invest in quality companies at attractive prices. Notable stocks in this sector include Oceaneering International (OII), Helix Energy Solutions Group (HLX), and Sunoco LP (SUN), potentially offering substantial benefits to investors incorporating them into their portfolios.
In-Depth Analysis of EIA’s Weekly Petroleum Status Report
Let’s delve into the highlights of the EIA’s Weekly Petroleum Status Report for the week ending January 12.
Crude Oil: The EIA report disclosed a surprising 2.5 million barrel decrease in crude inventories, defying analyst expectations of a 93,000-barrel increase. The decline, attributed to heightened refiner demand and increased exports, offset ongoing domestic production at an all-time high of 13.3 million barrels per day.
The total domestic stock now stands at 429.9 million barrels, reflecting a 4% decrease from the year-ago figure of 448 million barrels and a 3% reduction from the five-year average.
Furthermore, the report indicated a noteworthy decrease in supplies at the Cushing terminal, a key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange, falling 2.1 million barrels to 32.1 million barrels.
Gasoline: Gasoline supplies witnessed an eighth increase in nine weeks, with a notable 3.1-million-barrel rise attributed to decreased demand and higher imports. Current gasoline stock stands at 248.1 million barrels, marking a 7.7% increase from the year-earlier level and slightly surpassing the five-year average range.
Distillate: Distillate fuel supplies, encompassing diesel and heating oil, reported an eighth consecutive weekly rise, amounting to a 2.4 million-barrel surge primarily due to a decline in exports. Current inventories stand at 134.8 million barrels, reflecting a 16.4% increase from the year-ago level but a 3% decrease from the five-year average.
Refinery Rates: Refinery utilization experienced a marginal decrease of 0.3%, settling at 92.6%, compared to the previous week.
Top 3 Energy Stocks to Consider
In light of the insights from the Weekly Petroleum Status Report, investors keen on the energy sector may find merit in considering the following companies, each holding a Zacks Rank #1 (Strong Buy).
Oceaneering International (OII): The 2023 Zacks Consensus Estimate for OII indicates an impressive 177.4% year-over-year earnings per share growth. OII, valued at approximately $2 billion, has seen its shares rise by 6.5% in the past year.
Helix Energy Solutions Group (HLX): The 2023 Zacks Consensus Estimate for HLX suggests robust year-over-year earnings per share growth at 143.8%. With a valuation of around $1.4 billion, HLX has observed a commendable 24.7% increase in its shares over the past year.
Sunoco LP (SUN): SUN’s 2023 Zacks Consensus Estimate indicates a substantial 30.3% year-over-year earnings per unit growth. Valued at around $6.1 billion, SUN has demonstrated a noteworthy 32.4% rise in its units over the past year.
In conclusion, the dynamic interplay of shrinking supplies, heightened demand, and geopolitical tensions is reshaping the landscape for oil markets, offering both challenges and opportunities for investors navigating the energy sector.