QQQ   317.08 (-1.13%)
AAPL   164.92 (+0.03%)
MSFT   282.30 (+0.71%)
META   168.53 (-1.01%)
GOOGL   116.63 (-0.57%)
AMZN   137.83 (-1.13%)
TSLA   850.00 (-2.44%)
NVDA   170.86 (-3.97%)
NIO   19.17 (-4.96%)
BABA   91.19 (+0.39%)
AMD   95.54 (-4.53%)
MU   59.15 (-3.74%)
T   18.10 (+0.56%)
CGC   2.87 (-12.50%)
GE   74.93 (-0.33%)
F   15.19 (-3.74%)
DIS   108.13 (-0.90%)
AMC   22.45 (-6.30%)
PYPL   94.48 (-1.85%)
PFE   49.78 (+0.42%)
NFLX   229.94 (-1.52%)
QQQ   317.08 (-1.13%)
AAPL   164.92 (+0.03%)
MSFT   282.30 (+0.71%)
META   168.53 (-1.01%)
GOOGL   116.63 (-0.57%)
AMZN   137.83 (-1.13%)
TSLA   850.00 (-2.44%)
NVDA   170.86 (-3.97%)
NIO   19.17 (-4.96%)
BABA   91.19 (+0.39%)
AMD   95.54 (-4.53%)
MU   59.15 (-3.74%)
T   18.10 (+0.56%)
CGC   2.87 (-12.50%)
GE   74.93 (-0.33%)
F   15.19 (-3.74%)
DIS   108.13 (-0.90%)
AMC   22.45 (-6.30%)
PYPL   94.48 (-1.85%)
PFE   49.78 (+0.42%)
NFLX   229.94 (-1.52%)
QQQ   317.08 (-1.13%)
AAPL   164.92 (+0.03%)
MSFT   282.30 (+0.71%)
META   168.53 (-1.01%)
GOOGL   116.63 (-0.57%)
AMZN   137.83 (-1.13%)
TSLA   850.00 (-2.44%)
NVDA   170.86 (-3.97%)
NIO   19.17 (-4.96%)
BABA   91.19 (+0.39%)
AMD   95.54 (-4.53%)
MU   59.15 (-3.74%)
T   18.10 (+0.56%)
CGC   2.87 (-12.50%)
GE   74.93 (-0.33%)
F   15.19 (-3.74%)
DIS   108.13 (-0.90%)
AMC   22.45 (-6.30%)
PYPL   94.48 (-1.85%)
PFE   49.78 (+0.42%)
NFLX   229.94 (-1.52%)
QQQ   317.08 (-1.13%)
AAPL   164.92 (+0.03%)
MSFT   282.30 (+0.71%)
META   168.53 (-1.01%)
GOOGL   116.63 (-0.57%)
AMZN   137.83 (-1.13%)
TSLA   850.00 (-2.44%)
NVDA   170.86 (-3.97%)
NIO   19.17 (-4.96%)
BABA   91.19 (+0.39%)
AMD   95.54 (-4.53%)
MU   59.15 (-3.74%)
T   18.10 (+0.56%)
CGC   2.87 (-12.50%)
GE   74.93 (-0.33%)
F   15.19 (-3.74%)
DIS   108.13 (-0.90%)
AMC   22.45 (-6.30%)
PYPL   94.48 (-1.85%)
PFE   49.78 (+0.42%)
NFLX   229.94 (-1.52%)

Oil and Gas Stocks

An oil and gas stock is public company involved in the exploration, drilling, and refinement of oil and natural gas. What is an oil and gas stock?

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CompanyCurrent PricePE RatioMarket CapVolumeAverage VolumeIndicator(s)
Exxon Mobil Co. stock logo
XOM
Exxon Mobil
$90.59
+1.8%
9.91$377.55 billion19.05 million29.72 millionInsider Buying
Analyst Revision
Chevron Co. stock logo
CVX
Chevron
$155.41
+1.3%
10.37$305.35 billion5.78 million13.41 millionAnalyst Report
Analyst Revision
Shell plc stock logo
SHEL
Shell
$52.52
+1.1%
5.53$200.89 billion4.10 million5.11 millionAnalyst Revision
Gap Up
TotalEnergies SE stock logo
TTE
TotalEnergies
$51.83
+2.2%
6.57$135.10 billion1.38 million2.66 millionAnalyst Revision
Gap Up
ConocoPhillips stock logo
COP
ConocoPhillips
$95.51
+2.0%
7.89$123.54 billion7.46 million8.43 millionEarnings Report
Dividend Announcement
Equinor ASA stock logo
EQNR
Equinor ASA
$37.17
+1.9%
7.38$120.66 billion1.56 million3.86 millionAnalyst Revision
Petróleo Brasileiro S.A. - Petrobras stock logo
PBR
Petróleo Brasileiro S.A. - Petrobras
$15.44
+0.7%
3.23$100.70 billion33.71 million32.25 millionDividend Cut
BP p.l.c. stock logo
BP
BP
$30.57
+1.4%
N/A$98.53 billion9.56 million14.72 millionDividend Increase
Analyst Revision
ServiceNow, Inc. stock logo
NOW
ServiceNow
$487.46
-1.5%
535.67$98.47 billion982,3641.82 million
Caterpillar Inc. stock logo
CAT
Caterpillar
$186.03
+0.1%
14.88$98.21 billion2.43 million3.51 millionEarnings Report
Analyst Report
The Estée Lauder Companies Inc. stock logo
EL
Estée Lauder Companies
$265.63
-1.7%
29.06$94.92 billion1.04 million1.58 millionAnalyst Report
Analyst Revision
News Coverage
Enbridge Inc. stock logo
ENB
Enbridge
$43.42
+0.0%
22.85$87.92 billion2.37 million4.29 million
Brookfield Asset Management Inc. stock logo
BAM
Brookfield Asset Management
$50.20
-0.1%
20.66$82.41 billion1.50 million1.75 millionUpcoming Earnings
News Coverage
Positive News
PetroChina Company Limited stock logo
PTR
PetroChina
$44.62
+1.6%
5.11$81.66 billion154,204190,105Gap Up
BHP Group Limited stock logo
BHP
BHP Group
$53.90
-0.9%
N/A$79.51 billion2.40 million4.52 millionUpcoming Earnings
Waste Management, Inc. stock logo
WM
Waste Management
$169.90
+0.2%
33.18$70.23 billion1.17 million1.86 million
EOG Resources, Inc. stock logo
EOG
EOG Resources
$108.24
+1.0%
11.10$63.43 billion2.56 million4.56 millionEarnings Report
Dividend Increase
General Dynamics Co. stock logo
GD
General Dynamics
$227.62
+0.8%
19.26$62.42 billion878,2821.41 millionDividend Announcement
Canadian Natural Resources Limited stock logo
CNQ
Canadian Natural Resources
$52.69
+0.4%
6.91$59.93 billion2.32 million3.36 millionDividend Announcement
Gap Up
Occidental Petroleum Co. stock logo
OXY
Occidental Petroleum
$62.41
+3.9%
6.15$58.49 billion22.21 million29.48 millionEarnings Report
Insider Buying
Analyst Revision
Gap Up
ABB Ltd stock logo
ABB
ABB
$29.28
-1.4%
13.56$57.53 billion1.41 million2.39 million
Enterprise Products Partners L.P. stock logo
EPD
Enterprise Products Partners
$26.12
+0.7%
11.77$56.95 billion2.96 million6.88 millionEarnings Report
China Petroleum & Chemical Co. stock logo
SNP
China Petroleum & Chemical
$46.83
+1.7%
4.81$56.70 billion170,570175,068Analyst Upgrade
News Coverage
Pioneer Natural Resources stock logo
PXD
Pioneer Natural Resources
$218.19
+0.5%
9.02$52.79 billion2.05 million2.63 millionEarnings Report
Dividend Increase
Analyst Revision
Gap Up
Emerson Electric Co. stock logo
EMR
Emerson Electric
$86.59
-3.8%
18.12$51.43 billion4.36 million3.14 millionEarnings Report
Dividend Announcement
News Coverage
Gap Down
TC Energy Co. stock logo
TRP
TC Energy
$48.68
-1.0%
19.24$47.88 billion2.59 million1.87 million
O'Reilly Automotive, Inc. stock logo
ORLY
O'Reilly Automotive
$717.02
+0.7%
22.65$47.13 billion667,212588,362Insider Selling
Marathon Petroleum Co. stock logo
MPC
Marathon Petroleum
$93.35
+3.3%
6.31$46.55 billion4.29 million6.56 millionEarnings Report
Valero Energy Co. stock logo
VLO
Valero Energy
$110.67
+4.0%
6.37$43.60 billion3.53 million4.97 million
Freeport-McMoRan Inc. stock logo
FCX
Freeport-McMoRan
$30.05
-1.9%
9.13$43.55 billion12.86 million19.84 million
AutoZone, Inc. stock logo
AZO
AutoZone
$2,222.51
+0.2%
19.71$43.31 billion110,676184,411
Eni S.p.A. stock logo
E
ENI
$23.51
+0.2%
3.05$42.38 billion641,015591,746Analyst Revision
Suncor Energy Inc. stock logo
SU
Suncor Energy
$30.43
+0.1%
5.89$42.00 billion6.69 million8.11 millionDividend Increase
TE Connectivity Ltd. stock logo
TEL
TE Connectivity
$131.04
-1.4%
17.11$41.91 billion854,4601.70 million
Phillips 66 stock logo
PSX
Phillips 66
$85.53
+2.1%
7.37$41.14 billion1.98 million4.20 million
Kinder Morgan, Inc. stock logo
KMI
Kinder Morgan
$18.04
+2.0%
16.86$40.64 billion11.67 million17.32 million
The Williams Companies, Inc. stock logo
WMB
Williams Companies
$32.83
+1.2%
25.65$40.00 billion4.28 million9.01 million
Nucor Co. stock logo
NUE
Nucor
$138.59
+1.5%
4.25$36.87 billion1.52 million3.10 millionAnalyst Upgrade
Waste Connections, Inc. stock logo
WCN
Waste Connections
$139.73
+0.2%
52.93$35.93 billion823,7761.10 millionDividend Announcement
Analyst Report
Analyst Revision
News Coverage
TransDigm Group Incorporated stock logo
TDG
TransDigm Group
$644.04
+0.4%
44.82$35.17 billion273,341322,992Earnings Report
Dividend Announcement
News Coverage
Energy Transfer LP stock logo
ET
Energy Transfer
$10.97
+0.7%
8.78$33.86 billion15.48 million22.21 million
Apollo Global Management, Inc. stock logo
APO
Apollo Global Management
$57.90
+0.8%
N/A$33.26 billion1.97 million3.51 millionEarnings Report
Dividend Announcement
Analyst Report
Analyst Revision
Cenovus Energy Inc. stock logo
CVE
Cenovus Energy
$17.04
-0.4%
10.65$33.22 billion10.61 million11.99 million
Hess Co. stock logo
HES
Hess
$106.58
+2.5%
22.63$33.00 billion1.31 million2.65 million
Mplx Lp stock logo
MPLX
Mplx
$31.16
+1.9%
9.96$31.54 billion1.20 million2.14 millionEarnings Report
Cummins Inc. stock logo
CMI
Cummins
$218.12
-0.6%
15.27$30.75 billion567,8871.09 millionEarnings Report
KKR & Co. Inc. stock logo
KKR
KKR & Co. Inc.
$51.75
-2.0%
40.43$30.67 billion1.68 million3.50 millionEarnings Report
Dividend Announcement
Fastenal stock logo
FAST
Fastenal
$53.30
-0.7%
29.78$30.63 billion2.18 million3.46 million
AMETEK, Inc. stock logo
AME
AMETEK
$124.84
-0.7%
26.56$28.66 billion775,0961.07 millionEarnings Report
Dividend Announcement
Analyst Report
Albemarle Co. stock logo
ALB
Albemarle
$244.66
-0.1%
110.21$28.66 billion752,5401.23 millionEarnings Report
Analyst Report
News Coverage
LyondellBasell Industries stock logo
LYB
LyondellBasell Industries
$87.26
+1.5%
5.32$28.46 billion1.34 million2.33 million
Rockwell Automation, Inc. stock logo
ROK
Rockwell Automation
$245.16
-2.2%
42.79$28.30 billion788,319899,412
Imperial Oil Limited stock logo
IMO
Imperial Oil
$43.48
+2.8%
7.04$27.46 billion677,940642,270
ONEOK, Inc. stock logo
OKE
ONEOK
$61.38
+3.7%
18.21$27.41 billion3.12 million2.85 millionEarnings Report
News Coverage
Continental Resources, Inc. stock logo
CLR
Continental Resources
$67.53
+2.1%
8.39$24.51 billion569,1641.87 million
Baker Hughes stock logo
BKR
Baker Hughes
$23.85
-1.7%
N/A$24.30 billion7.33 million10.84 million
Coterra Energy Inc. stock logo
CTRA
Coterra Energy
$28.13
+1.1%
7.81$22.38 billion6.76 million10.34 millionEarnings Report
Dividend Announcement
Ecopetrol S.A. stock logo
EC
Ecopetrol
$10.78
+0.7%
7.33$22.16 billion1.12 million1.41 millionUpcoming Earnings
Diamondback Energy, Inc. stock logo
FANG
Diamondback Energy
$124.54
+1.1%
5.82$21.60 billion2.72 million2.88 millionBuyback Announcement
Genuine Parts stock logo
GPC
Genuine Parts
$152.07
+0.1%
19.70$21.51 billion925,197771,990
CGI Inc. stock logo
GIB
CGI
$84.41
-2.2%
18.07$20.23 billion104,284184,148Analyst Downgrade
Pembina Pipeline Co. stock logo
PBA
Pembina Pipeline
$36.38
+0.8%
17.83$20.20 billion666,0911.15 millionEarnings Report
Dividend Increase
Citizens Financial Group, Inc. stock logo
CFG
Citizens Financial Group
$37.15
-0.2%
9.41$18.41 billion2.51 million5.72 million
FLEETCOR Technologies, Inc. stock logo
FLT
FLEETCOR Technologies
$225.12
-1.0%
19.34$17.41 billion367,597558,979Analyst Report
Analyst Revision
News Coverage
Teck Resources Limited stock logo
TECK
Teck Resources
$31.11
+0.6%
3.86$16.23 billion3.87 million5.76 million
Evergy, Inc. stock logo
EVRG
Evergy
$69.54
+1.3%
19.59$15.96 billion1.11 million1.35 millionEarnings Report
Dividend Announcement
News Coverage
EQT Co. stock logo
EQT
EQT
$42.91
+3.8%
N/A$15.87 billion5.12 million8.89 millionOptions Volume
Gap Up
Tenaris S.A. stock logo
TS
Tenaris
$26.35
+0.9%
8.45$15.55 billion1.75 million2.73 millionAnalyst Revision
Marathon Oil Co. stock logo
MRO
Marathon Oil
$21.96
+0.6%
5.20$15.54 billion12.51 million20.70 million
LKQ Co. stock logo
LKQ
LKQ
$54.52
0.0%
12.95$14.96 billion1.35 million1.78 million
Centrais Elétricas Brasileiras S.A. - Eletrobrás stock logo
EBR
Centrais Elétricas Brasileiras S.A. - Eletrobrás
$9.48
-0.3%
N/A$14.87 billion1.13 million2.00 millionUpcoming Earnings
Analyst Upgrade
News Coverage
Bunge Limited stock logo
BG
Bunge
$97.38
+1.1%
8.38$14.79 billion1.04 million1.60 million
Stanley Black & Decker, Inc. stock logo
SWK
Stanley Black & Decker
$91.70
-5.4%
14.84$13.55 billion2.59 million2.02 millionAnalyst Downgrade
Texas Pacific Land Co. stock logo
TPL
Texas Pacific Land
$1,711.00
+0.0%
34.89$13.21 billion14,63929,466Dividend Cut
Sasol Limited stock logo
SSL
Sasol
$20.79
+0.8%
N/A$13.19 billion113,508343,089Upcoming Earnings
Analyst Downgrade
The Carlyle Group Inc. stock logo
CG
The Carlyle Group
$34.12
-3.3%
6.24$12.33 billion5.90 million2.62 millionAnalyst Downgrade
News Coverage
High Trading Volume
Advance Auto Parts, Inc. stock logo
AAP
Advance Auto Parts
$191.77
-1.3%
21.36$11.63 billion397,612821,368
Darling Ingredients Inc. stock logo
DAR
Darling Ingredients
$71.89
+0.1%
17.41$11.61 billion1.61 million1.48 millionPositive News
Hubbell Incorporated stock logo
HUBB
Hubbell
$213.45
-0.3%
22.03$11.45 billion242,956322,902
Chesapeake Energy Co. stock logo
CHK
Chesapeake Energy
$94.63
+2.0%
N/A$11.44 billion2.86 million2.07 million
Chesapeake Energy Co. stock logo
CHK
Chesapeake Energy
$94.63
+2.0%
9.89$11.44 billion2.86 million2.07 millionDividend Cut
Analyst Revision
Positive News
Antero Resources Co. stock logo
AR
Antero Resources
$37.35
+3.7%
13.88$11.43 billion5.35 million8.59 millionGap Up
Graco Inc. stock logo
GGG
Graco
$67.00
-1.2%
26.38$11.33 billion1.13 million655,069Analyst Report
HF Sinclair Co. stock logo
DINO
HF Sinclair
$49.29
+4.5%
14.50$11.00 billion1.48 million2.35 millionEarnings Report
Dividend Announcement
News Coverage
CNA Financial Co. stock logo
CNA
CNA Financial
$40.41
+0.1%
10.58$10.96 billion264,631166,158Dividend Announcement
Watsco, Inc. stock logo
WSO
Watsco
$281.05
-1.7%
20.86$10.95 billion212,442247,474
APA Co. stock logo
APA
APA
$32.68
+1.5%
N/A$10.67 billion6.25 million9.35 millionGap Up
APA Co. stock logo
APA
APA
$32.68
+1.5%
3.68$10.67 billion6.25 million9.35 millionEarnings Report
Analyst Revision
Gap Up
Magellan Midstream Partners, L.P. stock logo
MMP
Magellan Midstream Partners
$49.65
-0.5%
10.63$10.31 billion709,8141.17 million
Ares Capital Co. stock logo
ARCC
Ares Capital
$20.16
9.12$10.00 billion1.55 million3.66 million
Watsco Inc stock logo
WSO.B
Watsco
$241.66
17.94$9.42 billion5272
Gerdau S.A. stock logo
GGB
Gerdau
$4.96
+1.4%
2.71$8.53 billion14.83 million14.26 millionDividend Increase
Range Resources Co. stock logo
RRC
Range Resources
$32.17
+6.9%
16.58$8.46 billion5.50 million5.69 millionGap Up
Plains All American Pipeline, L.P. stock logo
PAA
Plains All American Pipeline
$11.24
+1.3%
13.71$7.92 billion3.80 million5.51 millionEarnings Report
Analyst Report
Ritchie Bros. Auctioneers Incorporated stock logo
RBA
Ritchie Bros. Auctioneers
$69.88
+1.5%
26.47$7.75 billion627,755502,832Dividend Increase
Analyst Report
News Coverage
Southwestern Energy stock logo
SWN
Southwestern Energy
$6.77
+3.5%
N/A$7.56 billion26.71 million34.98 millionEarnings Report
Analyst Revision
Gap Up
RBC Bearings Incorporated stock logo
ROLL
RBC Bearings
$243.79
+0.1%
118.35$7.00 billion182,578154,453Earnings Report
Analyst Report
Analyst Revision
News Coverage
Polaris Inc. stock logo
PII
Polaris
$116.63
-0.3%
27.12$6.95 billion563,319733,399
NOV Inc. stock logo
NOV
NOV
$17.58
+1.2%
N/A$6.91 billion2.17 million4.54 million
Matador Resources stock logo
MTDR
Matador Resources
$54.93
+1.5%
6.31$6.49 billion892,0891.89 million
The How And Why of Investing in Oil Stocks

For a long time having exposure to oil was a no-brainer for any investor. From air travel and commuting to heating our homes and powering factories, oil truly powered the world.

And oil and its derivative products (e.g. gasoline) still does to a great extent. However, the fallout of the novel coronavirus may have begun a process in which the impact of oil on global markets is becoming less and less. That’s because renewable energy sources were already becoming cost-competitive with oil, and that price gap is lessening as time goes on.

Nevertheless, the world will still be using fossil fuels for the near future. And that means that oil stocks belong in your portfolio. Oil stocks contain less risk than trying to buy and sell oil on the options or futures markets. And most oil stocks pay a dividend which gives investors a predictable income stream that can make up for the volatility that is inherent in these stocks.

Introduction

The most important thing to remember about investing in oil stocks is that your investment is fundamentally driven by supply and demand. Simply put when demand for crude oil is high, prices go up. Conversely when demand decreases, so do prices.

For decades, particularly since World War II, the demand for oil was high. Many nations were building a new infrastructure of roads and bridges. Air travel was making the world smaller and businesses became truly international. And powering all of it was oil.

You can invest in oil by trading the commodity directly by trading options in the futures market. Some investors will also choose to invest in an exchange-traded fund (ETF) that is tied to the price of oil or includes a basket of companies with exposure to the oil sector.

However, a more indirect (and slightly less risky) way to play the oil market is to buy oil stocks. An oil stock can cover many areas of oil production. In this article, we’ll review why you should consider investing in oil; we’ll review your investment options, and more directly the different types of oil companies that you can invest in.   

Why should you invest in oil today?

The pandemic brought on by the novel coronavirus has been devastating for the oil and gas sector. As we mentioned above, this is a supply and demand business. And the first hint that the virus was worse than we thought was when oil futures began falling in February.

This is an important thing to know about investing in oil. Oil has been a reliable indicator of economic activity. When analysts and institutional investors forecast decreasing demand for oil, they bid down the price of crude oil. This in turn affects oil stocks which as we said tend to move with the market.

Due to the severe demand restriction during the pandemic, several oil companies have gone bankrupt. And the share price of most oil stocks has fallen dramatically. And when the notion of a “V-shaped” recovery did not materialize, it has put further pressure on oil prices.

Nevertheless, despite several near-term headwinds, oil will remain a worthwhile investment. And oil stocks can be a way for risk-averse investors to have exposure to the oil sector without dabbling in the commodities market.

The basics of oil production

Oil is expensive to bring to market. It’s more than just the cost of extracting it from the ground. Oil has to be transported, stored, and in many cases refined into gasoline or other products. And those costs are usually fixed.

This is a double-edged sword for the oil companies. When a barrel of oil sells for more than the sum of all these costs, oil companies turn a profit. And stocks of oil companies will go up as well.

However, the opposite is also true. When oil sells for less than, many of these companies will lose money. During these times, stocks of oil companies will go down.

Why buy oil stocks?

Although oil stocks generally move in concert with the price of a barrel of crude, the correlation is not always exact. For example, many oil companies will talk of a “break-even” point. This can allow the price of crude to fall a little while these companies can still be profitable. This makes oil stocks a slightly less risky option than trading oil in the options or futures market.

But perhaps the most important reason to own oil stocks is that many oil stocks pay a dividend. For example, prior to the pandemic some oil companies had increased their dividends for decades. These companies know that preserving its dividends has to be a priority because of the volatility associated with the underlying price of oil.

However, it’s important that you focus less on a company’s dividend yield (which can move up or down with the share price), but also on how the yield compares to the company’s free cash flow (FCF). In general, investors want to find companies that can pay their entire dividend obligation out of its FCF. This “payout ratio” should be at least 1.1.

Different types of oil stocks

Investing in oil stocks would be easier if all oil companies were affected in the same way by rising or falling crude prices. But, in fact, the oil sector is very diverse and each sector may be affected slightly differently by rising or falling oil prices.

Here is a brief description of different kinds of oil stocks:

  • Upstream companies – These are the companies investors most frequently think about as an oil stock. These companies are involved in exploration and production. As the name implies, this means these companies explore locations looking for oil. When they find a promising location, they drill wells to extract the oil. However as you might imagine, these companies are affected most by changes in the price of crude oil. The largest upstream company in the United States is ConocoPhillips (NYSE:COP).

  • Midstream companies – These companies transport crude oil through pipelines that is then stored in terminals that they own. The oil stays there until it is sent to be refined or exported. Some of these companies will even transport the newly refined company through its own pipeline networks. Midstream companies are slightly more insulated from oil price fluctuations because they usually operate on long-term contracts with fixed terms. One of the leading midstream companies is Enterprise Products Partners (NYSE:EPD). A unique aspect of EPD stock is that the company is a master limited partnership. This has tax advantages for individual shareholders but can increase the risk of larger losses.

  • Downstream companies – These companies refine oil into other products such as gasoline and petrochemicals. In many cases, these companies are also part of selling this refined product to consumers. Two examples of downstream companies are gas station operators and refinery operators. Although these companies are not directly affected by a drop in crude prices, their stock still tend to fall when oil prices fall. One of the major downstream companies is Phillips 66 (NYSE:PSX).

  • Integrated companies – These companies do business in more than one of the fields mentioned above. When you hear a reference to “Big Oil” companies, it is a reference to companies such as ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) that have large upstream and downstream operations with some midstream business.

  • Oilfield services companies – Another way to invest in oil stocks is through the companies that provide equipment, operational support, and logistics to other oil companies, typically upstream companies. Oilfield services companies are hurt when oil prices fall because one of the first things upstream companies will do is cut their service costs.

ETFs are a different way to play oil stocks

The easiest and more popular way to invest in oil stocks is to buy stocks of individual companies. However, investing in exchange-traded funds (ETFs) can be a smart way to manage the risk of this sector. An oil ETF allows investors to invest in one or more of the sectors listed above at one time. For example, the SPDR Oil and Gas Exploration & Production ETF (NYSEARCA: XOP) tracks the upstream sector.

The final word about investing in oil stocks

Oil stocks have been battered in 2020. But the near-term outlook for oil makes oil stocks an attractive investment opportunity. The fortunes of oil companies are impacted to a greater or lesser extend to the price of crude oil. And that’s why it’s important for investors to understand what subsector of the oil industry the company they are interested in investing in is engaged in.

However the benefit of having multiple options is that investors have many options including buying shares of ETFs that add even more diversity.



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