As the summer driving season is in full swing, high fuel prices clearly foretell a summer full of pain. For the first time in history, American motorists are pumping over $ 5 for a gallon of gasoline, with the current price of $ 5,014 for regular gasoline and $ 5,771 for diesel, both all-time highs.
Of course, a cross-section of Wall Street worries that high fuel prices, combined with invisible inflation, could wreak havoc on demand and ultimately lower oil prices.
“It simply came to our notice then [high inflation] “Even though demand for gasoline is strong now, it is a sign in the future that if gasoline prices do not stabilize, then consumers will fall,” Price Futures analyst Phil told CNBC. Flynn.
Fortunately for the bulls, the opposite camp, including oil bulls like Goldman Sachs, have been advised that energy prices are not yet high enough to curb demand.
Although oil and gas reserves have generally risen sharply in the wake of the commodity explosion, profits have not been uniform, with some sectors outperforming their counterparts. Credit Suisse energy analyst Manav Gupta stood on the stock with the largest exposure to oil and gas prices. Here are his top 5 choices in different oil and gas industries.
Canadian Oil Sands Cenovus Energy (NYSE: CVE) develops, manufactures and markets crude oil, liquefied petroleum gas and natural gas in Canada, the United States and the Asia-Pacific region. The company operates through the Oil Sands, Conventional, and Refining and Marketing sectors.
Last month, Cenovus issued a statement announcing a “suspension of crude oil price risk management activities,” essentially saying it was abandoning its hedging program. Management argued that the company was not “offsetting” production, but was using a strategy to lock in profits using the company’s dynamic storage. In any case, the risk management plan is no longer needed, given the strength of the balance sheet and the liquidity position of the company.
In other words, the CVE can now enjoy higher spot prices without the luggage of the fuel compensators.
More recently, shares of Cenovus Energy rose after announcing that it had agreed to restart the West White Rose Project in the offshore areas of Newfoundland and Labrador.
The West White Rose project is a $ 3.2 billion expansion project for the White Rose offshore oil field. The project, which is about 65% complete, stopped for more than two years after the collapse of the pandemic-related market.
The first oil from the platform is expected in the first half of 2026, with peak production expected to reach ~ 80,000 bbls / day, 45,000 bbls / d net at Cenovus, by the end of 2029. The remaining capital required for production crude oil is expected to be 2 $ 2B to $ 2.3B net for Cenovus.
Ovintiv Inc. (NYSE: OVV) is a Denver-based energy company based in Denver, Colorado, which, together with its subsidiaries, is engaged in the exploration, development, production and marketing of liquefied natural gas, oil and gas.
The company’s main assets include Permian in western Texas and Anadarko in western central Oklahoma and Montney in northeastern British Columbia and northwestern Alberta. Her other upstream assets include the Bakken in North Dakota, the Uinta in central Utah, the Horn River in northeastern British Columbia, and the Wheatland in southern Alberta.
Last month, Mizuho upgraded the OVV to $ 78 from $ 54 (good for a 32% upside from the current price), citing improved winds.
ConocoPhillips Inc., one of the largest oil and gas companies in the Western Hemisphere. (NYSE: COP) is a Houston, Texas-based company that explores, produces, transports, and markets crude oil, tar, natural gas, liquefied natural gas (LNG), and liquefied natural gas worldwide. It mainly deals with conventional and closed oil tanks, shale gas, heavy oil, LNG, petroleum sand and other production operations.
The COP portfolio includes unconventional toys in North America. Conventional assets in North America, Europe, Asia and Australia; various LNG developments; oil assets in Canada. and an inventory of conventional and unconventional exploration prospects. ConocoPhillips was founded in 1917 and is headquartered in Houston, Texas.
Scotia Bank recently upgraded its COP shares to buy, as shares fell 7% year-on-year from the E&P index.
Last week, Qatar selected ConocoPhillips along with Exxon Mobil (NYSE: XOM), TotalEnergies (NYSE: TTE) and Shell (NYSE: SHEL) as partners in expanding the world’s largest liquefied natural gas project. State-owned Qatar Energy had decided to make the final investment decision to develop the $ 30 billion project on its own. The four new partners are said to have 20% -25% of the total absorption of the North Field expansion project.
Phillips 66 (NYSE: PSX) is a power generation and logistics company based in Houston, Texas. It operates in four sectors: Midstream, Chemicals, Refining and Marketing and Specialties (M&S). Phillips 66 was founded in 2012 after ConocoPhillips surpassed its middle and later business divisions.
Refineries such as the Phillips 66 are currently enjoying high refining margins amid limited supplies and strong demand. While there is a fair chance that high fuel prices will eventually lead to a breakdown in demand, Goldman Sachs says demand for distilled fuels is likely to remain strong and margins likely to remain high due to these factors:
Diesel and jet fuel stocks are at historic lows, and seasonally adjusted inventories are large and accelerating. Jet fuel consumption is poised to accelerate in the summer with a return to international travel. High gas prices will lead to a change from “gas to oil” in Europe and Asia. The Russia / Ukraine war will reduce the supply of spirits as Russia exports ~ 900kb / d of diesel fuel and ~ 900kb / d of remaining raw materials, which are greatly upgraded to diesel from European and Chinese refineries.
Another Texas oil and gas company, Targa Resources Corp. (NYSE: TRGP), together with its subsidiary Targa Resources Partners LP, owns, operates, acquires and develops a portfolio of medium current energy assets in North America. The company is active in the collection, compression, processing, processing, transportation and sale of natural gas. storage, fractionation, processing, transportation and sale of liquefied natural gas (NGL) and NGL products, including services to LPG exporters; and collection, purchase, storage, termination and sale of crude oil. Targa operates approximately 28,400 miles of gas pipelines, including 42 privately owned and operated treatment plants. and owns or operates a total of 34 storage wells with a gross storage capacity of approximately 76 million barrels. As of December 31, 2021, the company leased and operated approximately 648 railcars. 119 transport tractors. and two NGL barges under pressure owned by the company. Targa Resources Corp. was founded in 2005 and is headquartered in Houston, Texas. By Alex Kimani for Oilprice.com More top readings from Oilprice.com:
