The Best Oil Stocks to Watch
After surging to their highest levels in around a decade at the beginning of 2022, oil prices have retreated but remain at high levels historically. For those interested in investing in oil, oil stocks allow investors to gain exposure to the sector.
But are the best oil stocks in 2024? In this article, we will examine some of the world’s top oil stocks, demonstrate how to buy oil stocks and much more!
Table of Contents
Why Invest in Oil Stocks?
Although the world may have begun transitioning to greener energy, the truth is that we are still reliant on fossil fuels, such as crude oil, for much of our energy consumption. As well as being a major source of fuel, crude oil is also used in the production of various other goods, such as fertilisers and plastics.
Many investors have turned their backs on oil and gas stocks in recent years, preferring instead to invest their money in cleaner energy for the future. Looking at the longer-term, renewable energy stocks may prove to be the wiser choice, as the future of our planet depends on the success of this industry, and it continues to increase its market share each year.
However, that does not necessarily mean that top oil stocks have nothing to offer in the meantime.
Whilst oil prices are high, companies operating in the oil sector tend to flourish. As well as providing an opportunity for capital growth, there are many oil dividend stocks which regularly distribute a portion of their profit amongst shareholders.
Best Oil Stocks to Watch in 2024
So, what are the best oil stocks to watch in 2024? In the following sections, we will take a look at a couple of the world’s top oil stocks.
ExxonMobil
The first of our oil stocks to watch is ExxonMobil, which is one of the largest oil companies in the world by market capitalisation. It operates in both upstream, exploration and production of oil and natural gas, and downstream, manufacturing and distributing of petroleum products.
In recent years, the oil giant has also begun investing in cleaner technology, such as carbon capture and storage and low-carbon hydrogen, with $17 billion earmarked for investment low emission investments between 2022 and 2027.
Since the pandemic, Exxon Mobil has prioritised cutting costs and generally making its business more efficient. This strategy appears to have borne fruit, although has undoubtedly been helped by higher oil and gas prices.
After a long-term downtrend, which started in 2014, Exxon Mobil share price has soared since the end of 2020, hitting an all-time high in the process.
However, despite this stock market surge, Exxon Mobil shares appear to be quite good value when compared with the oil stock’s earnings. At the time of writing, Exxon Mobil is trading at a price to earnings (P/E) ratio of around 9, considerably lower than the S&P 500’s average P/E of approximately 25.
ExxonMobil is also one of the top oil dividend stocks, having consistently paid and increased its dividend every year for 40 consecutive years. Based on its most recent dividend payment and current share price, this oil stock has a dividend yield of 3.2%.
Chevron
The second of our best oil stocks to watch is another major US oil company. Chevron, although not quite as large as ExxonMobil, is also one of the largest oil companies in the world by market capitalisation and, like ExxonMobil, operates in both the upstream and downstream sectors of the oil industry.
Since the early days of the pandemic, the Chevron share price has done rather well, as higher oil prices led to many top oil stocks reporting record-breaking earnings. However, despite share price hitting an all-time high towards the end of 2022, like Exxon Mobil, Chevron shares still appear reasonably priced in the context of the wider market. At the time of writing, the stock is trading with a trailing P/E ratio of 10.5.
Like many of the other best oil stocks, Chevron has been diversifying in recent years looking for more opportunities in lower carbon solutions, renewable fuels and hydrogen. In 2022, the company acquired biodiesel maker Renewable Energy Group Inc and has $10 billion allocated for low-carbon investments through to 2028.
And what about dividends? Like Exxon Mobil and many other oil stocks, Chevron has a long and consistent history of dividend payments, having increased its annual dividend every year for 36 years. At the time of writing, the oil dividend stock has a dividend yield of around 3.7%.
Risks of Investing in Oil
As with any investment, there are risks involved with buying oil stocks. The performance of an oil company is highly dependent on the price of oil, which has a history of being particularly volatile.
When oil prices are high, oil stocks tend to perform well. However, when oil prices fall, these companies tend to struggle.
Oil prices are currently at historically high levels, but that doesn’t mean they will be forever. In fact, with interest rates forecast to remain higher for longer, and many economies still grappling to bring inflation under control, economic growth is forecast to slow in 2024 and the prospect of a recession shouldn’t be ruled out. If a recession, or slowdown, materialises it could cause demand for oil to fall which, in turn, would most likely lead to prices falling.
How to Invest in Oil Stocks with Admiral Markets
With an Invest.MT5 account from Admiral Markets you can invest in some of the best oil stocks in the world, including the two oil stocks to watch we have highlighted in this article.
In order to open an account and start investing in oil stocks, follow these steps:
- Open an Invest.MT5 account from Admiral Markets and log in to the Dashboard
- Click ‘Invest’ next to your account details to open the web trading platform
- Search for the desired oil stock and click its symbol to open a price chart
- Select ‘New Order’, enter the number of oil shares you want to buy and hit ‘Buy’ to send the order to the market!
Investing with Admiral Markets
With an Invest.MT5 account, you can choose from over 4,500 stocks and over 200 Exchange-Traded Funds (ETFs) from 15 of the largest stock exchanges in the world! In order to start enjoying all these benefits and many more, click the banner below to register for an Invest.MT5 account today:
Oil Investing FAQ
How Can I Invest in Oil?
Investors can invest in oil by buying oil stocks or by investing in Exchange-Traded Funds (ETFs) which provide exposure to the industry. It is also possible to trade oil over the short-term using financial derivative products such as Contracts for Difference (CFDs) and futures contracts.
What Is the Biggest Oil Stock?
The largest oil stock by market capitalisation is Saudi Aramco.
Is Oil a Risky Investment?
Oil prices play a big role in the performance of companies which operate in this sector. Consequently, oil stocks tend to be cyclical, performing well when oil prices are high and worse when they are low. Unfortunately, oil prices tend to be volatile, which increases the risk of investing in companies which operate in this sector.
Other articles you may find interesting:
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
