Crude Price Dynamics: Oil Stocks That Typically Move with Spot Prices


Energy stocks intricately woven with oil prices, hold the spotlight. As oil prices hover high, these stocks are predicted to chart an upward trajectory. Here’s an insightful exploration into seven notable players that may see the perfect storm for growth.

1. Targa Resources Corp. (NYSE: TRGP)
Targa Resources, a stalwart in U.S. midstream logistics, specializes in onshore natural gas and NGLs (natural gas liquids). Analyst Neel Mitra emphasizes the robust growth of Targa’s Permian Basin NGL assets. Although a second-quarter dip was observed, Mitra regards it as a transient phase, pointing to the consistent performance of the company’s core sectors, such as gathering, processing, and transportation. With a 52% correlation to WTI crude prices, Targa’s alignment stands unmatched among Bank of America’s recommendations. The bank proposes a “buy”, with a target of $95. As of September 15, 2023, TRGP was priced at $84.66.

2. Schlumberger Ltd. (NYSE: SLB)
Schlumberger, a vanguard in oilfield services, is deemed a gem in its sector by Analyst Saurabh Pant. He accentuates the company’s visionary alignment to international markets, predicting a promising future. Pant forecasts a substantial rise in the company’s free cash flow, expecting the ratio of free cash flow-to-revenue to escalate from 5% in 2022 to 11% by 2024. Reflecting a 47.3% correlation with WTI crude prices, Bank of America affirms a “buy” recommendation, with a target set at $64. As of recent metrics, SLB traded at $60.58.

3. Hess Corp. (NYSE: HES)
Hess Corp, an eminent figure in global crude oil and gas exploration, is set for an illustrious trajectory, opines Analyst Doug Leggate. He cites the Liza project in Guyana as a potential game-changer for Hess, noting its present self-funding status and the positive cash flow ripple it has triggered. Leggate envisions an upward surge in Liza’s cash flow and believes Guyana’s full potential is yet to be acknowledged by the market. With a 46% sync with crude prices, Bank of America upholds a “buy” stance, pitching the stock’s worth at $205. On September 15, 2023, HES was evaluated at $160.35.

4. Halliburton Co. (NYSE: HAL)
A beacon in oilfield services, Halliburton merges its vast legacy with innovative capabilities. It remains well-poised to seize opportunities sprouting from oscillating oil prices.

5. ConocoPhillips (NYSE: COP)
ConocoPhillips, an acclaimed player in exploration and production, constantly broadens its global spectrum. Its eclectic portfolio and tactical initiatives make it primed to capitalize on surging crude prices.

6. EOG Resources Inc. (NYSE: EOG)
With a 39% alignment and a 12.2% growth trajectory, EOG Resources solidifies its place in the oil and gas exploration sphere. Its avant-garde techniques and operational efficiency mark it as a top pick for discerning investors.

7. Baker Hughes Co. (NYSE: BKR)
Renowned for its pioneering solutions, Baker Hughes stands ready to tackle the challenges posed by volatile oil prices, backed by its global footprint.

Concluding Thoughts:

WTI crude prices have seen staggering growth over the last three months. Stocks tethered to oil prices have reaped substantial free cash flows. Perhaps oil is just making its way in catching up with inflation.

Investing in these stocks demands astuteness, strategy, and caution.


Disclaimer: This article is intended for informational purposes only. It should not be considered financial or investment advice. We do not hold any form of equity in the securities, cryptocurrency or commodities mentioned in this article as of 09/17/2023. Always consult with a certified financial professional before making any financial decisions.

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