There is hope that the collapse in crude oil appeared to near its end Tuesday after a meeting between OPEC and Russia ended on Tuesday with an agreement to freeze production at January levels — contingent on other major producers following suit and a special arrangement for Iranian output to return to pre-sanction levels.
While the details of the deal haven’t been solidified yet — and while worries over Iran and Iraq cooperation actually blunted areas of Tuesday’s rally — this marks an increase in coordination between OPEC and Russia that hasn’t been seen since energy prices topped in 2014. That potentially opens the door to further cooperation in the months to come.
We will know more when Venezuela’s oil minister meets with ministers from Iraq and Iran on Wednesday.
For now, however, this represents a rare positive catalyst for the bombed-out oil and gas sector that’s fallen more than 40% from its highs in the summer of 2014.
Here’s a look at seven energy stocks that could be ready to run higher on further production cooperation between Russia and OPEC.
Big Oil Stocks to Buy: Exxon Mobil Corporation (XOM)
Exxon Mobil Corporation (XOM) stock has been leading the energy pack higher over the past month, up roughly 14% from its January low to retake its 200-day moving average and move in on its early November high near $86. That’s been great news for my Edge Pro subscribers carrying a 126% gain in their Feb $79 XOM calls.
The recovery was driven by better-than-expected earnings of 67 cents per share reported at the start of the month.
Big Oil Stocks to Buy: Chevron Corporation (CVX)
Chevron Corporation (CVX) shares are a solid candidate for new money as they look ready to perk up and out of a two-month consolidation range with a break up and over its 50- and 200-day moving averages. I’m looking for a run at the upper end of the November-December trading range near $92.50.
Looking ahead, like many other oil majors, Chevron management is looking to aggressively cut operating costs to protect profitability — somewhere in the region of 13% to 18% based on CVX’s estimates.
Big Oil Stocks to Buy: Schlumberger Limited. (SLB)
Shares of oil services play Schlumberger Limited. (SLB) have rebounded more than 20% off of their mid-January lows and are poised for a run at their 200-day moving average for an additional gain of about 7%. Such a move could potentially mark the end of a persistent three-year downtrend that has seen SLB shares lose nearly half their value.
Schlumberger remains preoccupied with completing its acquisition of Cameron International Corporation (CAM), which got the federal green light in November.
Big Oil Stocks to Buy: Halliburton Company (HAL)
Halliburton Company (HAL) shares are trying to lift off of a test of the mid-January low near $28. The first stop will be the 50-day moving average near $33. A return to the August-December trading range centered near $38 would be worth a 27% gain from here.
HAL is also preoccupied with a merger completion: its absorption of Baker Hughes (BHI), which started getting under way back in 2014.
Halliburton recently reported adjusted earnings of 31 cents per share, 7 cents ahead of estimates despite a 42% drop in revenues.
Big Oil Stocks to Buy: PetroChina Company Limited (ADR) (PTR)
Chinese oil major PetroChina Company Limited (ADR) (PTR) is seeing shares test their 50-day moving average for the first time since November on Tuesday, lifting nicely off of their January low. That’s nearly a 18% gain over the past month.
PetroChina has also been helped by aggressive efforts by Chinese authorities to stabilize the yuan, with the Shanghai Composite launching out of a two-month consolidation range on Tuesday morning and challenging its 20-day moving average for the first time since December.
All that will help boost PTR.
Big Oil Stocks to Buy: ConocoPhillips (COP)
ConocoPhillips (COP) shares continue to flat-line near $32.50 in the midst of an unbroken downtrend going back to November that wiped near 43% off the stock price. Since shares peaked in 2014, the total decline totals nearly 60%.
The company reported disappointing results back on Feb. 4, pushing shares lower, with a Q4 loss of 90 cents per share coming in 26 cents below the consensus estimate. Capital expenditures guidance was cut, the quarterly dividend was cut and its production outlook was revised to flat.
The situation is primed for a rapid short-squeeze rebound.
Big Oil Stocks to Buy: Kinder Morgan Inc (KMI)
Energy pipeline stock Kinder Morgan Inc (KMI) has perked up and over its 50-day moving average on Tuesday for the first time since October — a quiet, professional-looking technical breakout in this area of the oil and gas industry. Shares lost more than 73% of their value from the high set last spring into the low set in January.
Kinder Morgan analysts upgraded the stock in late January on the belief investors will be attracted to the company’s fee-based cash flows, modest leverage and limited capital market requirements in this difficult environment.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
