The energy sector is thriving amid record oil production and increasing demand for oil and gas. Given this backdrop, fundamentally strong oil and gas stocks Antero Midstream Corporation (AM – Get Rating), CSI Compressco LP (CCLP – Get Rating), Star Group, L.P. (SGU – Get Rating), and Martin Midstream Partners L.P. (MMLP – Get Rating), trading below $15, could be solid buys this month to yield significant returns. Moreover, these companies provide the added advantage of consistent and reliable dividend disbursements.
As tensions grow amid the Israel-Hamas conflict and the ongoing war between Russia and Ukraine, it casts substantial uncertainty over the global marketplace. The World Bank projects potential oil price spikes should turmoil intensify across the Middle East.
Iran’s suggested involvement in Hamas’ attacks on Israel could spur the U.S. to strengthen its sanctions. Coupled with the fact that the Middle East contributes about 30% of the world’s oil production, growing turmoil could drive oil prices beyond $100/barrel. Regardless of the potential impact of the conflict’s magnitude on oil supply, Saudi Arabia and Russia’s production cuts could cause an uptick in oil prices.
The current administration’s mission to reduce carbon emissions does not seem to impact U.S. crude oil production, which currently sits at an all-time high. This has led to increased supertankers docking on the Gulf Coast for export. Over the next quarter, 48 vessels will arrive in the U.S., marking the most significant maritime traffic in over half a decade.
The future of global oil demand appears robust. The U.S. Energy Information Administration (EIA) data forecast U.S. natural gas production and demand will break new records by 2023. Dry gas production is projected to increase to 103.7 billion cubic feet per day (bcfd) in 2023 and 105.1 bcfd in 2024. Domestic consumption is expected to surge to 89.4 bcfd in 2023.
Standard Chartered anticipates Brent prices to reach $98/bbl for 2024, $109 per barrel in 2025, and $128 per barrel in 2026.
In light of these encouraging trends, let’s look at…
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