The increasing oil and gas exploration and drilling endeavors to meet the heightened global energy demand provide a solid foundation for the energy industry’s growth in the foreseeable future. Additionally, a constrained supply could trigger an oil price rise, cementing a sustained momentum for key players within the sector.
This scenario could invigorate investment interest in the sector, particularly targeting companies best positioned to reap significant profits. Against this backdrop, quality energy stocks Liberty Energy Inc. (LBRT – Get Rating), Delek US Holdings, Inc. (DK – Get Rating), and Precision Drilling Corporation (PDS – Get Rating) could be solid buys now to capitalize on the industry tailwinds.
Let’s first briefly discuss the energy sector’s dynamics before analyzing the fundamentals of the stocks.
Despite the global push toward sustainable energy resources, the demand for oil and gas remains resilient, with future projections indicating an increased consumption of these non-renewable fuels.
The International Energy Agency (IEA) has revised its oil demand growth forecast in 2023 to 2.4 million barrels per day (bpd) and 930,000 bpd for 2024, while OPEC foresees oil demand soaring by 2.5 million bpd in 2023, potentially expanding by 2.25 million bpd by 2024.
The forecasted swell in demand spurs exploration and production companies to uncover new oil reserves. Industry services like drilling, completion, production, and well interventions crucial to fulfilling the demand offer promising opportunities for prominent energy corporations.
Drilling activity demonstrates an upward trend, evidenced by the rising rig count for a second consecutive week. The global oilfield services market is expected to reach $550.09 billion by 2032, growing at a CAGR of 6.5%.
Geopolitical turmoil, like the ongoing Russia-Ukraine and Israel-Hamas conflicts, oil spills in the Gulf of Mexico, and Saudi Arabia and Russia’s supply cuts, could sustain elevated oil prices and create a conducive climate for oil exploration and production endeavors.
Considering these conducive trends, let’s look at the…
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