In this article, we will take a look at the 10 oil stocks to watch on Thursday. To take a look at some more stocks on our watchlist, go to 5 Oil Stocks to Watch on Thursday.
Energy stocks are in the limelight on Thursday after the Organization of Petroleum Exporting Countries (OPEC), led by Saudi Arabia, agreed to increase crude oil production to counter the impact of a reduction in Russian production. This could result in a decline in crude oil prices, which would cool off the rising inflation. Furthermore, experts are calling this a peace offering by Riyadh to Washington, which could make way for a visit to Saudi Arabia by US President Joe Biden. Oil stocks such as ConocoPhillips (NYSE:COP), Shell plc (NYSE:SHEL), and Chevron Corporation (NYSE:CVX) are attracting investors’ attention today.
Let’s look at why these stocks are in the news today and discuss how hedge funds are positioned in them.
10. Exxon Mobil Corporation (NYSE:XOM)
Exxon Mobil Corporation (NYSE:XOM) is an Irving, Texas-based integrated oil corporation that is involved in the upstream, midstream, and downstream parts of the value chain. The stock is up 0.09% as of 12:50 PM ET. The energy company has operations globally. In a note issued to investors on May 31, Jeanine Wai at Barclays increased the price target on Exxon Mobil Corporation (NYSE:XOM) from $98 to $111 and reiterated an Overweight rating on the stock. The analyst anticipates the company to reach 0% net debt by 2026 despite an increase in share repurchase activity.
Here’s what Goehring & Rozencwajg Associates said about Exxon Mobil Corporation (NYSE:XOM) in its Q3 2021 investor letter:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publically expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
Exxon Mobil Corporation (NYSE:XOM) was held by 83 hedge funds at the end of Q1 2022.
9. TotalEnergies SE (NYSE:TTE)
TotalEnergies SE (NYSE:TTE) is a French oil major and is up 0.55% as of 1:02 PM ET. As one of the seven supermajors in the world, the company is expected to be affected by OPEC’s decision. TotalEnergies SE (NYSE:TTE) received a boost when Henry Tarr at Berenberg upgraded the stock from a Hold to a Buy rating on May 13. The analyst highlighted that TotalEnergies SE (NYSE:TTE) reported strong operational results but is underperforming against its peers. Tarr anticipates the company to report a free cash flow yield of 17%, which could make it the highest dividend-paying stock in terms of dividend yield.
As of Q1 2022, TotalEnergies SE (NYSE:TTE) was held by 20 hedge funds. Fisher Asset Management was long over 26 million shares of TotalEnergies SE (NYSE:TTE) during the first quarter of 2022.
8. Enbridge Inc. (NYSE:ENB)
Enbridge Inc. (NYSE:ENB) is a Canadian pipeline company that is up 2.09% as of 1:05 PM ET. On May 17, the Premier of Alberta, Jason Kenney, testified in front of the US Senate Committee. He said that Canada could raise its crude oil output by 900,000 barrels per day (BPD) to make up for the shortfall of supply shortages due to the conflict between Russia and Ukraine. The premier highlighted an energy alliance would be beneficial for the people of North America. Enbridge Inc. (NYSE:ENB) continues to increase its dividends and offers a dividend yield of 6% as of June 2.
Enbridge Inc. (NYSE:ENB) was mentioned in the Q3 2021 investor letter of ClearBridge Investments. Here’s what the firm said:
“We are meaningfully overweight energy, particularly within North American energy infrastructure. Enbridge and Williams, our two infrastructure holdings, possess crown jewel infrastructure assets. They each deliver meaningful proportions of the overall energy produced and consumed in North America. Their revenues are backed by long-term contracts with high-quality counterparties and have little direct commodity price exposure. Their growth has been driven by the increasing production of North American energy. The advent of unconventional oil and gas production (oil sand and shale) has made North America a low-cost competitor on a global basis. We expect strong North American production to be an enduring feature of global energy supply for decades to come.”
Of the 912 hedge funds in Insider Monkey’s database, 24 funds held a stake in Enbridge Inc. (NYSE:ENB) as of Q1 2022.
7. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is a Rio de Janeiro, Brazil-based state-owned integrated energy company. The stock is down 0.69% as of 2:42 PM ET. Brazilian President Jair Bolsonaro, who is running for re-election later this year, recorded his protest against the energy company for raising its prices in line with the international market. The President also commented that Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is not fulfilling its “social function” as required by the constitution of Brazil.
However, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is currently a Zacks Rank #1 in the Oil and Gas Emerging Markets industry, which means the analysts are rating the stock as a Strong Buy.
As of Q1 2022, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) was held by 28 hedge funds.
6. China Petroleum & Chemical Corporation (NYSE:SNP)
China Petroleum & Chemical Corporation (NYSE:SNP) is down 0.78% as of 2:42 PM ET. The company is the second-biggest oil producer in China that has taken a keen interest in acquiring Russian assets of firms suspending operations in the country. The Chinese energy company is in talks with Shell plc (NYSE:SHEL) to acquire its assets. However, Shell plc (NYSE:SHEL) is hesitant to offload its high-quality assets at a steep discount during these uncertain times, as this would undermine shareholders’ returns. Renaissance Technologies was the leading investor in China Petroleum & Chemical Corporation (NYSE:SNP) during the first quarter of 2022.
China Petroleum & Chemical Corporation (NYSE:SNP) was held by 7 hedge funds at the end of Q1 2022.
In addition to China Petroleum & Chemical Corporation (NYSE:SNP), stocks such as ConocoPhillips (NYSE:COP), Shell plc (NYSE:SHEL), and Chevron Corporation (NYSE:CVX) are on our watchlist today.
Click to continue reading and see 5 Oil Stocks to Watch on Thursday.
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Disclose. None. 10 Oil Stocks to Watch on Thursday is originally published on Insider Monkey.
