US oil stocks look attractive after recent sell-off

Despite short-term uncertainty on the supply side, emerging markets are expected to drive strong demand for oil in the long-term.

Vikram Barhat 21 November, 2018 | 6:00PM

Plummeting oil prices, including last week’s sharp drop in WTI crude prices, coupled with amplified volatility across global equity markets have put the US energy sector on course to be one of the worst performing sectors of the year, second only to minerals. The S&P 500 Energy Index is down 7% for the year to date, compared to nearly 3% gains for the S&P 500 index, according to S&P Dow Jones Indices.

Up until recently, oil prices were expected to continue to be under pressure given the ability and motivation of the Organization of the Petroleum Exporting Countries (OPEC) to ramp up production, causing a supply glut. However, if OPEC decides to cut production at its Dec 06 meeting, this could change.

While it’s unclear how things will shake out on the supply side, the recent OPEC World Oil Outlook report forecasts stronger long-term demand for oil, driven by emerging economies.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BP PLC ADR35.36 USD-1.72
Chevron Corp109.01 USD-0.73
Exxon Mobil Corp59.13 USD-1.22
Royal Dutch Shell PLC ADR Class B49.51 USD-1.08

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a freelance writer.