5 Top Energy Stocks In Play As Oil Prices Hold Above  Per Barrel

Energy stocks may be poised to have a moment in 2023 with U.S. oil prices upshifting to close above $80 per barrel for the past five weeks. Technical indications suggest prices could move higher on news around supply, stockpile depletion or the economic situation in China.


Energy stocks topped the market in 2022, after Russia’s Ukraine invasion upended global energy markets. Oil prices, and many energy stocks, have fallen off this year, dragged lower as global markets stabilized. However, U.S. oil prices have climbed and held back above the psychologically important $80 per barrel level. Many analysts expect a move higher in coming months.

Those circumstance are just the kind of thing to trigger speculation of a cyclical oil industry rebound, and send energy stocks back to the head of the market. In recent weeks, here are some of the names that have shown the most positive action.

Energy Stocks To Watch: U.S. Producers

The IBD-tracked Oil & Gas-Machinery/Equipment industry group has outperformed the S&P 500 in 2023, gaining nearly 25% so far this year. Cactus (WHD) and Baker Hughes (BKR) are in the that group.

WHD shares are only up around 5% so far in 2023. But they have spent much of the year forming a deep cup-with-handle base with a 53.85 buy point, according to MarketSmith analysis. Shares were 1% below that entry on Thursday.

Meanwhile, BKR has been trading tightly the past five weeks and has a buy point at its 2023 high of 36.48. Investors could have plotted an early entry opportunity at 35.62 (which can also be viewed as a handle to a long consolidation).

Oilfield Service Firms Gain Strength

The Oil & Gas-Field Services group is barely 1% higher in 2023. But SLB (SLB), formerly known as Schlumberger, has formed a cup-with-handle base, with a 58.70 buy point. The stock has broken above a downtrend in the handle. It is also rebounding from a test of support at its 10-week moving average.

Fellow oilfield services giant Halliburton (HAL) has also formed cup-with-handle base. It is sitting around 10% below a 43.42 entry, according to MarketSmith.

Meanwhile, Tidewater (TDW) broke out above a 51.88 buy point on June 30. It is now rebounding from 10-week support, trading within a 59-64.90 buy zone.

The year has so far shown unenthusiastic outlooks for production and capital expenditure increases. As a result, the Oil & Gas Drilling group is down more than 6% for the year. But there are more than a few bright spots in that picture.

Diamond Offshore Drilling (DO) has soared more than 50%. The energy stock is currently in consolidation with a 16.52 buy point. Shares are attempting to move back above the 50-day moving average.

And of course there is also energy giant ExxonMobil (XOM). The overall Oil & Gas-Integrated industry group is down around 1% on the year. But ExxonMobil has treaded water, gaining 4% so far. The energy stock is currently in a cup base with a 119.92 buy point.

Oil Prices: Poised For A Jump?

On Thursday, West Texas Intermediate (WTI) oil prices jumped around 1%, trading as high as $82.92 per barrel, and on track for a six-session advance. Prices are also tracking toward a possible sixth straight weekly close above $80, a first in 2023.

Meanwhile, prices for Brent crude, the international benchmark, moved above $85.80 per barrel.

China’s disappointing economy recovery, after removing its yearslong Covid restrictions late last year, has weighed on oil prices. But the latest data from the critical oil user hints at signs of recovery, with manufacturing activity contracting less than expected in August.

Recent technical action in oil trading has shown volume favoring rebounds, weakness on declines, according to Standard Chartered analysts.

“In our view, the market is not trading in a way that suggests much conviction in substantial, sustainable downside,” Standard Chartered analysts noted to Rigzone Tuesday.

“Further, low volatility coupled with difficulty in sustaining downward momentum often signals an impending upside break,” the analysts wrote.

U.S. natural gas prices eased Thursday to $2.74 per million British thermal units, as traders keep tabs on how Hurricane Idalia could impact supply and demand.

U.S. natural gas prices are down around 60% vs. the same time in 2022. Last August futures spiked to 14-year highs as Russia’s invasion of Ukraine sparked fears of an energy crisis in Europe.

Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.


Get An Edge In The Stock Market With IBD Digital

Labor Unions Keep The Heat On Starbucks And Amazon

Stocks Near A Buy Zone

Learning How To Pick Great Stocks? Read Investor’s Corner

Futures: Stocks Extend Gains, Salesforce Jumps Late Ahead Of Key Data

Source link