Oil prices surged more than 80% from the lows in February to the high in May. Wall Street was not only excited about the coming surge in demand for oil stocks, there was all that chatter about a possible OPEC-Russia supply freeze deal (which came to not) and short-term supply disruptions.
Oil stocks surged, helping the overall stock market rise out of its early year funk. But now, energy prices now look vulnerable to a downturn as U.S. production ramps up and overseas supply disruptions fade amid bloated inventories.
These disruptions included everything from terrorist attacks in Nigeria to ongoing strike in Libya to wildfires in Canada. But these have faded, along with other demand side dynamics such as stockpiling in China and ramped up refinery output. The result has been a turn higher in the backlog of refined gasoline, which started the summer driving season well above levels seen since 2012.
But this is set to be bad news for energy stocks, which look vulnerable to a resumption of the market share battle between U.S. shale producers and the OPEC that started this by holding production steady back in 2014.
Here are eight oil stocks that are at risk:
Oil Stocks at Risk: Exxon Mobil Corporation (XOM)
The chart of Exxon Mobil Corporation (NYSE:XOM) versus crude oil, as shown above, really summarizes the way energy stocks have separated from reality.
While oil prices have indeed come off their lows, they’ve merely returned to late-2015 levels; XOM, on the other hand, has surged all the way back to its mid-2014 highs when oil was trading for more than $107 a barrel instead of $45 now.
The company will next report results on July 29 before the bell. Analysts are looking for earnings of 64 cents per share on $66.6 billion in revenue. I have recommended the Aug $94 XOM puts to my Edge Pro subscribers.
Oil Stocks at Risk: ConocoPhilips (COP)
ConocoPhilips (NYSE:COP) is testing the lower end of its three-month consolidation range after trying, and failing, to break above its 200-day moving average. A breakdown here would test support at $38 ahead of a likely revisiting of the February low near $32.
The company will next report results on July 28 before the bell. Analysts are looking for a loss of 60 cents per share on revenues of $6.5 billion. I have recommended the August $41 COP puts to my Edge Pro subscribers.
Oil Stocks at Risk: National-Oilwell Varco, Inc. (NOV)
National-Oilwell Varco, Inc. (NYSE:NOV) looks vulnerable to a downside move out of its choppy post-February uptrend as it hits resistance near its 200-day moving average. Watch for a move below three-month support near $31. There has been some takeover chatter, which is helping shares on Thursday, but the support is likely to be short lived.
The company will report results on July 28 before the bell. Analysts are looking for a loss of 33 cents per share on revenues of $1.8 billion.
Oil Stocks at Risk: Phillips 66 (PSX)
Phillips 66 (NYSE:PSX) has already fallen to test its January/February lows near $74, unable to mount much of a rally over the last six months. This continues a long sideways slide gong all the way back to 2014. Back in April, the company warned of a low margin environment.
The company will next report results on July 29 before the bell. Analysts are looking for earnings of 93 cents per share on revenues of $29 billion.
Oil Stocks at Risk: Tesco Corporation (USA) (TESO)
Tesco Corporation (USA) (NASDAQ:TESO) enjoyed nearly a doubling off of its January low into its late April high, but has since been on the slide as oilfield activity has continued to decline.
Shares are down by a third over the last three months as a result. Adding pressure was the pricing of a seven million secondary offering of shares at $7 back in June as the company raises capital.
The company will next report results on August 9 before the bell. Analysts are looking for a loss of 42 cents per share on revenues of $32.5 billion.
Oil Stocks at Risk: Nabors Industries Ltd. (NBR)
Nabors Industries Ltd. (NYSE:NBR) shares are falling below their 50-day moving average on Thursday and look vulnerable to a decline below the 200-day average near $9. This would jeopardize the five-month consolidation range and risk a test of the January/February lows — which would be a 42% decline from here.
The company will next release results on Aug. 2 after the close. Analysts are looking for a loss of 45 cents per share on revenues of $505 billion.
Oil Stocks at Risk: Precision Drilling Corp (USA) (PDS)
Precision Drilling Corp (USA) (NYSE:PDS) shares are rolling lower on Thursday after reporting mixed second-quarter results. The company reportedly slightly better earnings, but missed on revenues (which fell 51% from last year) as drilling rig activity dropped 48% in Canada and 58% in the United States.
Back in April, the company reported a 41% year-over-year decline in revenues as the company focuses on maintaining a strong liquidity position through an extended downturn in its industry.
Oil Stocks at Risk: Hess Corp. (HES)
Hess Corp. (NYSE:HES) shares are testing the lower end of a four-month consolidation range with support at its 200-day moving average near $52.50.
There was some short-term excitement in the stock back in late June related to positive results from its Liza-2 exploration well in Guyana. But micro dynamics like this are eclipsed by the big macroeconomic headwinds hitting energy stocks.
The company will next report results on July 27 before the bell. Analysts are looking for a loss of $1.24 per share on revenues of $1.2 billion.