Energy stocks are once again in focus for investors. There’s a lot going on in this space. And with so many factors at play, it’s hard to gauge the price action in many top energy picks.
Shares of Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) and Marathon Petroleum (NYSE:MRO) are all higher by about 1% today. After what has seemed like weeks of consistent declines for these top oil producers, we’ve finally seen a day of reprieve.
Among the leading factors driving these stocks higher today are energy prices. Crude oil prices are trending higher today, with the price of Brent crude once again moving above $100 per barrel. Despite gas prices having fallen for a month straight, there are some indications we may be seeing some price stability in this volatile sector.
One of the key drivers of lower commodity prices is the previously-announced meeting between President Joe Biden and Crown Price Mohammed Bin Salman from Saudi Arabia. This ongoing meeting has been met with anticipation of higher output in the medium-term. However, reports today suggest little in the way of increased production is likely to come out of this meeting, bolstering global energy prices.
Let’s dive into what investors may want to make of the energy sector right now.
Are Energy Stocks Worth a Buy?
The rapid price increases we’ve seen in the energy sector are becoming a chief concern for governments and central banks everywhere. Higher energy prices have driven inflation higher, leading to calls for more production. As a result, Biden’s trip to Saudia Arabia, once unthinkable, is now taking place. It’s certainly an interesting time to be alive.
With so much political pressure on oil and gas prices to come down, many have expected to see more progress on this front. While central banks have done their part and raised interest rates, which has in turn increased the probability of a recession, the market is pricing in slower demand in the medium-term. However, should we see a period of stagflation, perhaps high oil prices could remain entrenched for some time.
Thus, whether or not buying energy stocks makes sense right now depends on one’s perspective. It’s likely to be a volatile space to invest in, as with most equities. However, I’ll be monitoring this sector closely, as I think we’re just at the beginning of what could be a very interesting time for energy investors moving forward.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
