Two weeks ago, oil prices were on the decline. This was driven by fears of a demand slowdown caused by the continued spread of the delta variant of Covid-19, which led to…
new lockdowns in countries such as Japan and New Zealand. Making matters worse was terrible economic data from China, the world’s largest crude importer.
But after the worst losing streak since 2019, oil prices bounced back last week as selling looked overdone. Helping matters were fewer COVID cases in China, which in itself creates a better demand environment. But secondly, the U.S. Dollar retreated from its recent highs, providing a foundation for commodities in general.
This rebound led to a golden cross on oil’s weekly chart. A golden cross occurs when an asset’s short-term moving average crosses above its long-term moving average. This occurred as crude oil’s 50-week moving average crossed above its 200-week moving average. The move indicates further upside, which is why investors should consider energy stocks such as Apache Corporation (APA – Get Rating), Continental Resources, Inc. (CLR – Get Rating), and EOG Resources, Inc. (EOG – Get Rating).
Apache Corporation (APA – Get Rating)
APA is an independent exploration and production company. It is engaged in exploring, developing, and producing natural gas, crude oil, and natural gas liquids. The firm’s operations are in the United States, Egypt, and the United Kingdom’s North Sea.
In the U.S., it mainly operates in the Permian Basin. As one of the largest oil producers in Permian, the company has over 2.9 million gross acres in the region, with exposure to Midland Basin, Delaware Basin, and Central Basin Platform. Its significant find is Alpine High, which is located in the southern portion of the Delaware Basin. This is expected to be an essential volume growth driver in the future.
APA is also involved in the midstream business via its publicly traded Permian subsidiary, Altus Midstream Company (ALTM). This subsidiary operates its gathering and processing assets in the region. Outside of the U.S., its operations are focused in the North Sea and Egypt, where APA is the largest oil producer and acreage holder.
Plus, the company’s discoveries in Suriname, through a joint venture with TotalEnergies, are expected to become a significant asset, providing massive cash flow potential. APA has an overall grade of Buy, which translates into a Buy rating in our POWR Ratings system. The company has a Momentum Grade of A as the stock is up 26.9% for the year and 12% over the past week.
APA also has a Quality Grade of A due to a rock-solid balance sheet. Its current and quick ratios are over 1, which means the company has more than enough liquidity to handle short-term obligations. We also provide Growth, Value, Stability, and Sentiment grades for APA, which you can find here.
APA is ranked # 5 in the Energy – Oil & Gas industry. For more top stocks in this industry, click here.
Continental Resources, Inc. (CLR – Get Rating)
CLR is a U.S. oil and gas producer targeting the Bakken Shale in North Dakota, and the Scoop/Stack plays in Oklahoma. In the East, the company has undeveloped leasehold acreage positions. Plus, its strategic water assets add massive value to its operations in Bakken and Oklahoma.
The firm’s position in the Bakken area bodes well. This shale play…
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