Oil prices gained momentum on Monday with the West Texas Intermediate (WTI) crude closing at a seven-week high mark of $52.14 per barrel. In fact, the greenback-priced crude rose 5.8% yesterday, the highest one-day percentage increase since the 7% rise on Feb 3, 2015.
The rally came primarily on the back of Saudi Arabia’s decision to hike the price of oil to be exported to Asia this May. This is reflective of strengthening oil demand in the region. Although the price rise is nominal − 30 cents per barrel – what investors should note is that Saudi Arabia’s crude price increase is the second in as many months.
Other reason for yesterday’s oil price rise was the speculation among traders that Iran’s preliminary nuke deal will not immediately lead the country to export oil to the already oversupplied global market.
Investors should also consider market speculations that the rise in U.S. crude inventory – which has been increasing steadily for the last few months − might slow down.
Stocks to Consider on Monday’s Oil Price Rally
The oil price rise is a boon for the majority of energy players. We focus on three stocks with a favorable Zacks Rank that soared yesterday. Investors are advised to include the stocks in their portfolio.
Canadian Oil Sands Ltd. COSWF
Calgary-headquartered Canadian Oil Sands mainly produces synthetic crude oil and develops non-declining reserves of crude. In the Syncrude project − oil sands mining development in Fort McMurray, Alberta − the company holds a 36.74% interest.
The company closed at $9.05 per share, increased 5.5% from the last trading day. Canadian Oil Sands currently holds a Zacks Rank #1 (Strong Buy), implying that it will significantly outperform the broader U.S. equity market over the next one to three months.
WPX Energy Inc. WPX
Tulsa, OK-based WPX Energy is primarily involved in oil and gas exploration and production activities. The company explores in the oil rich resources like Williston Basin in North Dakota and the San Juan Basin in the southwestern United States.
WPX Energy closed at $12.28 per share on the NYSE yesterday, reflecting a 4.6% rise from Friday’s closing price. Currently, the company carries a Zacks Rank #2 (Buy), implying that it will outperform the broader U.S. equity market over the next one to three months.
During fourth-quarter 2014, WPX Energy reported earnings per share of 3 cents against the Zacks Consensus Estimate of a loss of 11 cents. A significant rise in oil production led to the improvement.
EV Energy Partners LP EVEP
Houston, TX-based EV Energy Partners’ operations include exploration, development and production of oil and natural gas in the U.S., including the Appalachian Basin, the Permian Basin and Monroe Field in Northern Louisiana.
On Monday, the partnership – with a Zacks Rank #2 − closed at $13.99 per unit, 4.6% up from Friday’s closing price. During the last four quarters, EV Energy Partners posted positive earnings surprise of 21.02%.
Will the Oil Price Continue to Rise?
This is probably the toughest prediction. Theoretically, the more the delay in Iran’s oil export permit, the higher the chances of an oil price rise. The slowdown of U.S. crude inventory rise will also support the positive trend.
However, all these are speculations and one can only wait and see whether oil price moves further up or trickles down.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment