We recently published a list of 11 Best Crude Oil Stocks To Buy Right Now. In this article, we are going to take a look at where Occidental Petroleum Corporation (NYSE:OXY) stands against other best crude oil stocks to buy right now.
Crude oil markets have seen extreme volatility over the past year, fueled by a variety of economic, geopolitical, and supply and demand factors. Prices fell at the end of 2023, when international demand faltered and supply remained strong from key regions, before rebounding in early 2024 as leading oil-producing countries implemented supply cuts to stabilize the market. Meanwhile, demand signals have been mixed — industrial activity in major economies has improved, but high interest rates and inflationary pressures have limited overall energy consumption. After the presidential elections in the US, the Trump 2.0 agenda appears to be driving cracks in the economic outlook, due to a plethora of initiatives such as tariffs, a fight with immigration, and significant cuts in government spending. Despite Republicans notoriously being pro-business and pro-carbon, as confirmed by an announced policy of encouraging energy exploration and production on Federal land and Outer Continental Shelf, the reaction of the stock market has been mixed, as many crude oil stocks have underperformed the broad market in the last couple of months.
The reluctance of the broad market to price in an acceleration in the crude oil space is likely due to expectations of lower oil prices, primarily driven by an uncertain economic and industrial outlook. A slowing economy generally consumes less oil, which coupled with an increasing supply should put downward pressure on prices. Optimism for the year ahead vanished and the outlook has become one of the gloomiest since the pandemic. Companies started to signal widespread concerns about the impact of government policies, ranging from spending cuts to tariffs and geopolitical developments. For instance, the US economic surprise index hit the lowest last week since September, while the business capex forecasts were abruptly cut at the beginning of the year. Small businesses reflect similar signals, by cutting their capex expectations (as per surveys), while consumers report deteriorating financial expectations going forward. All these developments don’t play out in favor of a strong economy in the following quarters.
Financial markets have reflected this turbulence, as energy stocks moved in tandem with the swings in oil prices, which retracted more than 10% since the inauguration day. While refiners and midstream companies have generally performed well due to resilient transportation and processing demand, exploration and production firms have faced challenges in securing new investments. Looking forward, macroeconomic and geopolitical factors will continue to shape the crude oil market. Geopolitical factors, particularly in key oil-producing regions, remain an ongoing concern – with the end of the Ukraine conflict becoming a reality, Russian oil will likely flow more freely abroad, putting even more downward pressure on global prices. Despite the aforementioned headwinds, there are also some positive takeaways for investors – while renewable energy investments continue to grow, the transition remains gradual, ensuring that crude oil will remain a critical component of the global energy mix in the future, especially under the carbon-friendly Trump 2.0 regime. Furthermore, with oil prices declining and many crude oil stocks being down from their mid-2024 highs, the current developments may turn out to be a great long-term buying opportunity.
Our Methodology
We used the Insider Monkey proprietary hedge fund holding database and identified the 11 most popular crude oil companies, ranked by the number of hedge funds that own the stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Oil derricks in the background with a few workers in the foreground, emphasizing the company’s oil and gas production activities.
Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 98
Occidental Petroleum Corporation (NYSE:OXY) is a major integrated energy company with a strong focus on crude oil, natural gas and chemicals. As one of the largest independent oil producers in the US, OXY has significant operations in the Permian Basin, the Rockies and the Gulf of Mexico, along with international assets in the Middle East and North Africa. The company engages in upstream exploration and production, as well as midstream and marketing activities that support its oil and gas operations.
Occidental Petroleum Corporation (NYSE:OXY) delivered strong performance in 2024, generating $4.9 billion in free cash flow and achieving record total company production of 1.33 million BOE per day. The company successfully reached its near-term debt repayment target of $4.5 billion seven months ahead of schedule through asset sales and organic cash flow. Operational excellence was demonstrated through a 9% reduction in domestic lease operating expenses per barrel and approximately 12% lower well costs across unconventional basins. The company increased its year-end proved reserve balance to 4.6 billion BOE, representing an all-in reserve replacement ratio of 230% for 2024. OxyChem subsidiary exceeded original guidance to achieve over $1.1 billion in pretax income in 2024.
Looking forward to 2025, Occidental Petroleum Corporation (NYSE:OXY) plans to invest between $7 billion and $7.2 billion in its Energy & Chemicals business, with full-year production expected to average approximately 1.42 million BOE per day. The company remains focused on debt reduction and sustainable dividend growth, as evidenced by the recent 9% increase in common dividends. Major projects including Stratos and the battleground modernization project are progressing, with Stratos expected to be commercially operational this year and battleground completion expected in mid-2026. The company anticipates continued operational improvements, including a 10% improvement in time to market compared to last year and a 7% decrease in well costs. All in all, the outlook for this company is strong regardless of the evolution in crude oil prices.
Overall, OXY ranks 5th on our list of best crude oil stocks to buy right now. While we acknowledge the potential of OXY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than OXY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.