The Best Oil Stocks to Watch in 2022

Roberto Rivero

Oil prices seem to have been increasing non-stop recently, as supply struggles to keep up with an increase in global demand. This has caused many investors to once again feel bullish on the oil sector.

As well as trading oil using Contracts for Difference (CFDs), investors can gain exposure to the oil market by investing in oil stocks. But what are the best oil stocks to invest in? In this article, we will take a look at two top oil stocks to watch in 2022, explain how to invest in oil stocks and much more!

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 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, which they currently are, companies operating in the oil sector tend to flourish and, as well as providing an opportunity for capital growth, many oil stocks are also reliable dividend payers, something which is desirable in times of uncertainty.

Moreover, the majority of large oil companies have already begun diversifying their businesses into alternative, greener energy production. So, with all that in mind, what are some of the top oil stocks to watch in 2022?

Types of Oil Companies

Before we dive into the best oil stocks to watch in 2022, let’s take a quick look at the different types of oil companies which exist.

The oil industry is usually split into the three following sectors:

Upstream – Companies which operate in the upstream are engaged in oil exploration and production.

Midstream – Midstream companies are responsible for the transportation, processing or storage of oil.

Downstream – The downstream industry takes care of refining and distributing oil.

All oil companies are engaged in at least one of these sectors, with some of the world’s largest oil stocks spanning all three.

Best Oil Stocks to Watch in 2022

So, what are the best oil stocks to watch in 2022? In the following sections, we will be looking at the prospects of two top oil stocks: ExxonMobil and Chevron.

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.

Although much of the last ten years has been difficult for this oil stock, it has recently shown signs of recovery. Even before the outbreak of the coronavirus pandemic in 2020, ExxonMobil had been following a long-term downward trend, dropping 32% in the stock market between July 2014 and the end of December 2019 (period highlighted in red below).

Depicted: Admirals MetaTrader 5 – ExxonMobil Weekly Chart. Date Range: 25 January 2009 – 4 March 2022. Date Captured 7 March 2022. Past performance is not a reliable indicator of future results.

 

The beginning of this long-term downtrend coincides with the oil crash which began mid-2014 and ended early in 2016, during which Brent crude fell by more than 70% in price. Until the post-pandemic recovery, oil prices had never really recovered from this crash, and neither had ExxonMobil’s earnings.

The pandemic exacerbated the problems which already existed for ExxonMobil, causing earnings to decrease further and debt to rise, culminating in the oil stock’s removal from the Dow Jones Industrial Average (DJIA) in August 2020.

However, cost-saving steps taken by the company during the pandemic seem to be paying off. According to their 2021 fourth quarter results announcement, their cost cutting measures resulted in savings of $5 billion when compared to 2019. Furthermore, thanks to an exceptional fourth quarter, full-year 2021 earnings came in at $23 billion, compared with a loss of $22.4 billion the previous year.

Depicted: Admirals MetaTrader 5 – ExxonMobil Daily Chart. Date Range: 26 October 2020 – 4 March 2022. Date Captured: 7 March 2022. Past performance is not a reliable indicator of future results.

 

Since mid-December 2021, the ExxonMobil share price has been following an upward trajectory in tandem with the rising prices of crude oil and natural gas. This year alone, this oil stock has increased almost 37.5% (as of 4 March 2022), hitting a three and a half year high in the process. This performance is particularly impressive when compared against the S&P 500, which is currently down more than 9% year to date (YTD).

In January 2022, ExxonMobil announced that it had acquired a 49.9% stake in Norwegian biofuels company Biojet AS in an effort to expand its investment in lower-carbon businesses and reduce its greenhouse gas emissions.

ExxonMobil is also a dividend aristocrat, having consistently paid and increased its base dividend every year for 39 consecutive years. Based on its most recent dividend payment and current share price, this oil stock to watch has a current dividend yield of more than 4%.

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.

Again, like ExxonMobil, Chevron suffered as oil prices collapsed between 2014 and 2016. However, unlike ExxonMobil, Chevron’s share price recovered and, prior to the outbreak of the coronavirus pandemic, had been trading at around the same levels as before the oil crash. Furthermore, unlike ExxonMobil, Chevron has maintained its position in the DJIA, being the only top oil stock remaining in the index.

In the chart below, the period highlighted in green is the same as the period highlighted in red on the ExxonMobil weekly chart above (July 2014 – December 2019).

Depicted: Admirals MetaTrader 5 – Chevron Weekly Chart. Date Range: 22 February 2009 – 7 March 2022. Date Captured: 7 March 2022. Past performance is not a reliable indicator of future results.

 

As with all other oil stocks, Chevron had a difficult time in 2020 as global lockdowns caused demand for oil to plummet. In fact, at one point in 2020, Chevron and ExxonMobil reportedly discussed the possibility of merging their companies, in an attempt to slash costs in response to the declining oil and gas sector; although nothing came of these talks.

Thanks to the subsequent recovery in oil and natural gas prices, Chevron reported much improved results in 2021, with full-year earnings reported at $15.6 billion, compared with a loss of $5.5 billion in 2020. So far in 2022, Chevron share price has gained more than 35% (as of 4 March 2022).

Depicted: Admirals MetaTrader 5 – Chevron Daily Chart. Date Range: 29 October 2020 – 7 March 2022. Date Captured: 7 March 2022. Past performance is not a reliable indicator of future results.

 

Like many of the other best oil stocks, Chevron has been diversifying in recent years looking for opportunities in lower carbon solutions, renewable fuels and hydrogen. Most recently, Chevron announced the acquisition of the Renewable Energy Group, as it attempts to transition towards renewable fuels.

And what about dividends? Chevron is also a dividend aristocrat, having paid and increased its dividend every year for 35 years and has a current dividend yield of more than 3.5%.

How to Invest in Oil Stocks with Admirals

With an Invest.MT5 account from Admirals 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:

  • Sign up with Admirals and register for an Invest.MT5 account
  • Download and open the MetaTrader 5 trading platform
  • Press Control + U to bring up the ‘Symbols’ window, where you can search for the best oil stocks to invest in, then press ’Show Symbol’ to add the stock to the Market Watch window
Depicted: Admirals MetaTrader 5 – Symbols

 

  • Find the oil stock in the Market Watch section, right click and press ‘Chart Window’ to open a price chart
  • At the top of the screen, select ‘New Order’ to open an order screen. Here you can enter the amount of oil shares you wish to purchase before sending your order to the market
Depicted: Admirals MetaTrader 5 – Chevron Daily Chart – New Order. Date Range: 29 October 2020 – 7 March 2022. Date Captured: 7 March 2022. Past performance is not a reliable indicator of future results.

 

Why Invest with Admirals?

With an Invest.MT5 account, you can choose from over 4,300 stocks and over 200 Exchange-Traded Funds (ETFs) from 15 of the largest stock exchanges in the world! Other benefits of the Invest.MT5 account are:

  • The ability to open an account with a minimum deposit of just €1
  • Competitive transaction costs and no account maintenance fees
  • Free access to a vast and constantly expanding library of educational articles as well as regular analytical news
  • Exclusive access to our Premium Analytics portal, where you will find the latest market news, sentiment and technical insight
  • The option to purchase fractional shares in over 700 of the world’s top stocks, including the top oil stocks highlighted in this article!

In order to start enjoying all these benefits and many more, click the banner below to register for an Invest.MT5 account today:

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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 Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:  

  1. 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.
  2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  4. The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
  5. 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, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
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