Big Oil stocks raking in big profits despite sector slump

A positive industry trend could create strong tailwinds for some energy companies directly exposed to oil.

Vikram Barhat 29 November, 2017 | 6:00PM
Facebook Twitter LinkedIn

The U.S. energy sector is on course to end up as the second worst performing sector of 2017. On a year-to-date basis, the S&P 500 Energy Index is down more than 7% against a robust 18.4% total return for the S&P 500 Index, as of Nov. 24.

On a more upbeat note, though, oil prices have bounced back from the lows of the last few years, powered by an OPEC-led supply cut. In fact, this year they have been hovering around two-year highs, and there's expectation that they will continue to tick higher. The recent 2017 OPEC World Oil Outlook (WOO) report forecasts stronger long-term demand for oil, led by developing countries. Such growth is supportive for oil prices, which Morningstar expects to surge in 2018 to reach US$65 per barrel.

The positive industry trend could create strong tailwinds for some energy companies directly exposed to oil. While most of these companies are trading close to or just above their fair value, they are still trading well below their all-time highs -- some are still in the red for the year to date -- which suggests upside potential for long-term investors with some risk tolerance.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free
Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Chevron Corp97.64 USD2.94Rating
Exxon Mobil Corp55.21 USD2.93Rating
Royal Dutch Shell PLC ADR Class B40.81 USD0.82Rating
TotalEnergies SE ADR45.58 USD2.17Rating

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies