The price of crude oil continues to trade above the $50 support level, but Covid-19 concerns and new restrictive measures could significantly reduce oil demand. According to the latest news, the U.S. crude supply fell 5.3M barrels last week, and some estimates say that it could fell even more.
“U.S. energy stocks likely will be volatile as investors assess the impact of the Interior Department’s 60-day moratorium on issuing oil and gas leases on federal lands and waters. On the other side, initial steps taken by the Biden administration, such as its focus on fiscal spending, a likely delay in lifting Iran sanctions and restrictions on the energy industry, may help tighten the oil market in 2021-22,” said Goldman Sachs analyst Brian Singer.
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Some analysts said that energy stock “valuation looks cheap,” and that is just the result of lower growth prospects. This is not my opinion, and there are oil industry stocks that remain attractive for long-term oriented investors.
In the long term, analysts stay “bullish” on oil, which is undoubtedly positive for stocks from the oil and gas industry.
“What is clear to all of us is that the world will continue to need more energy in the decades ahead. In the near-term, as we recover from the COVID-19 pandemic, and looking longer term to 2045, as the global economy is expected to more than double in size, the world population is projected to grow by over 1.7 billion people, and given that we need to rid the world of the scourge of energy poverty, bringing light, heat, power, and low-emission fuels for cooking to billions that still go without,” said Mohammad Sanusi Barkindo, OPEC Secretary-General, at the S&P Global Platts Americas Petroleum and Energy Conference, 27 January 2021.
Here we outline three oil and gas industry stocks that are likely to outperform the rest of the market in the short-term
Kinder Morgan (NYSE: KMI) is facing the current covid crisis relatively well, and shares of this company could be a very good investment option. It is important to mention that the current dividend yield stands around 7.4% making the stock attractive for income investors.
The critical support levels are $13 and $12; $15 and $16 represent the resistance levels. If the price jumps above $15, it would be a signal to buy shares, and the next target could be around $16. On the other side, if the price falls below the $13 support level, we have the open way to $12 support.
Exxon Mobil (NYSE: XOM) is a stable company with a good position in the market, and at the current stock price, this company is not overvalued. The current dividend yield stands around 7.6%, EBITDA is above $18B, and the company will not face cash flow problems.
If the price jumps again above $50, the next target could be around $55, but if the price falls below the $40 support level, it would be a firm “sell” signal.
Suncor Energy (NYSE: SU) is a stable company that pays a very good dividend, and with oil at $35, it can still make money, pay a dividend, and wait for better times.
The important support levels are $16 and $14, $18, and $20, represent the resistance levels. If the price jumps above $16, it would be a signal to trade shares, but if the price falls below $14, it would be a strong “sell” signal.
Kinder Morgan, Exxon Mobil, and Suncor Energy are facing the current covid crisis relatively well, and these companies remain attractive for long-term oriented investors. In the long term, analysts stay “bullish” on oil, which is undoubtedly positive for stocks from the oil and gas industry.