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4 Big Winners as Oil Prices are on Course to Hit $100 a Barrel
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Oil prices across the globe are at present hovering near the coveted $95-a-barrel mark. On Sep 18, the global oil benchmark, Brent crude settled 0.5% higher at $94.43 a barrel.
Similarly, the West Texas Intermediate (WTI) crude increased nearly 0.8% to $91.48 a barrel in the last trading session.
Brent and WTI have touched this year’s highest levels following bullish technical indications and are widely projected to hit $100-$102 a barrel soon.
Citigroup recently predicted Brent crude to surpass $100 a barrel this year, while Chevron Corporation’s CVX CEO Mike Wirth sees oil prices jumping to $100 per barrel.
Oil prices have scaled northward for three successive weeks and are likely to notch their biggest quarterly jump since the beginning of the Russia-Ukraine war in the first quarter of last year.
Brent and WTI have traded in overbought territory for the seventh and fifth consecutive trading sessions.
So, what led to the rise in oil prices? Expectations about an increase in the demand for oil amid tighter supply due to output cuts pushed oil prices upward.
The Organization of the Petroleum Exporting Countries anticipates oil demand to perk up by 2.25 million barrels per day (bpd) worldwide next year. Oil demand is likely to stay vigorous as major oil-importing nations are expected to witness economic growth despite elevated inflation and higher interest rates.
On the other hand, major oil-producing nations, including Saudi Arabia and Russia, have decided to trim oil outputs by a combined 1.3 million bpd till the end of this year.
Meanwhile, the Energy Information Administration said that oil production, particularly from shale-producing areas in the United States, is likely to decline for the third consecutive month in October and may touch the lowest level since May 2023.
Oil Jump: A Boon for These Stocks
Companies involved in extracting and producing oil are well-poised to witness an improvement in their profit margins amid a seemingly unstoppable oil price rally. Notable among them are Viper Energy Partners VNOM and Granite Ridge Resources, Inc. GRNT.
Viper Energy Partners is an independent oil & gas exploration and production company. The Zacks Consensus Estimate for its current-year earnings has moved up 48% over the past 60 days. The company’s expected earnings growth rate for next year is 2.2%. VNOM currently has a Zacks Rank #3 (Hold).
Granite Ridge Resources is a scaled, non-operated oil and gas exploration and production company. The Zacks Consensus Estimate for its current-year earnings has moved up 6.9% over the past 60 days. The company’s expected earnings growth rate for next year is 9.7%. GRNT presently has a Zacks Rank #2 (Buy).
The relentless rise in oil prices, in the meantime, certainly bodes well for oil majors like Chevron. The oil price rise is expected to boost its financial performance in the fourth quarter of this year and is anticipated to improve the company’s free cash flow, which will lead to further investments in renewables research.
The company’s expected earnings growth rate for next year is 10.1%. Its shares have gained 33.5% over the past five-year period. CVX, presently, has a Zacks Rank #3.
It’s worth pointing out that the rise in oil prices pushed up both consumer and wholesale inflation in the United States last month. And with prices of indispensable commodities picking up, the value of gold rises. After all, gold acts as a hedge against inflation.
Thus, gold mining companies like Canada-based Barrick Gold GOLD, which also has operations in the United States, are well-positioned to gain.
The Zacks Consensus Estimate for its current-year earnings has moved up 3.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 18.7%. GOLD, presently, has a Zacks Rank #3.
Chevron Corporation (CVX): Free Stock Analysis Report
Barrick Gold Corporation (GOLD): Free Stock Analysis Report
Viper Energy Partners LP (VNOM): Free Stock Analysis Report
Granite Ridge Resources, Inc. (GRNT): Free Stock Analysis Report
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