Supply glut has caused drastic decline in Oil prices and forced companies to decrease their production in 2015, 16 and part of 2017. The impact was heavy losses to oil producing and energy infrastructure companies. Since, mid 2017 the situation has changed due to a series of actions from oil producing majors, OPEC. After a series of production cuts by OPEC and Russia, Crude oil prices have surged reasonably in 2017. Since the four years low of $35.55 in January 15, 2016, Brent crude price rose 88%, this situation is likely to continue due to ongoing compliance with production cuts and strong demand from China.

While there might be slow resurgence in U.S. shale oil production but that might not be enough to keep the oil prices at the current lower level. The oil output from U.S. is up 16% since mid-2016, however, EIA recently reported that U.S. commercial crude storage levels declined by 4.6-million-barrel in a week. U.S. crude production marked a 46-year high in October, last year. The country’s oil demand and exports also rose significantly at the same time.

Does the U.S. shale oil production alone can satisfy the increasing global oil demand in addition to the low oil production in other countries? This is a critical question; the rising oil prices certainly indicate a growing demand. Growing demand and strong compliance to production cuts from OPEC and Russia, present a positive outlook on oil prices.

Oil Stocks Recovery Top Picks for January 2018

Experts at Stock Chase has picked energy infrastructure stocks trading at dead cheap forward valuations.

Oil Recovery List (5)

Josef Schachter, President of Schachter Asset Management selected Bonavista Energy Corp (BNP-T) as a Top Pick,

“They are 71% natural gas and will keep production flat.  Excess cash flow will pay down debt.  He thinks they will raise the dividend in 2019.  There is so much potential when we have a recovery in Natural Gas.  (Analysts’ target: $3.45).”

Norman Levine, Managing Director of Portfolio Management Corp recommends Enbridge (ENB-T) as a Top Pick,

“People love to hate it.  The biggest pipeline company in North America.  Most of its distribution had been oil but an auction this year made it bigger in Gas.  They are selling some assets they bought to bring down the debt.  Line 3 is in bad need for replacement into the US and if that goes ahead it will be good for the stock. < (Analysts’ target: $60.00).”

Greg Newman, Director & Portfolio Manager of Scotia Wealth Management recommends Pembina Pipeline Corp (PPL-T) as a Top Pick,

“Just did another accretive deal in the Duvernay. Has a number of tailwinds happening. Their volumes are ramping. They bought Veresen which is integrating and going to be accretive for them. Strong natural gas liquid pricing should help them. Sees them growing earnings at 24%. Not cheap, but is reasonable given the growth and the quality. Dividend yield of 4.8%. (Analysts’ price target is $51.50.)” 

Geoff Scott, Institutional Portfolio Manager of Cambridge Global Asset Management recommends Tourmaline Oil Corp (TOU-T) as a Top Pick,

“A contrarian play going into 2018. Sees a strong year in 2018 with a lot of the issues plaguing the company in 2017 alleviating themselves. In their last call announced they were going to slow production and instituted a dividend to pay that back to shareholders (Analysts’ price target $30.)” 

Don Vialoux, Research Analyst of TimingTheMarket.CA & recommends Halliburton Co (HAL-N) as a Top Pick,

“The oil service stocks are starting to show signs of seasonal strength. The seasonal period of strength is from the middle of December right through until the end of April. Technically, the stock completed a reverse head and shoulders pattern, implying upside. Dividend yield of 1.5%. (Analysts’ price target is $54.)”

China has issued 121.32 million tonnes of crude oil import quotas for 44 companies in its first batch of allowances for 2018. With 8.5 million bpd of imports, China is already the world’s biggest importer of crude oil and it is expected to hit another record in 2018 as new refiners become operational.

All the stocks recommended by the experts above took a strong beating in the past two and half years and there is substantial potential for these stocks to reach their previous peaks. The foundation for the recovery of oil prices looks very strong with OPEC and Russia complying with the production cuts and strong demand from China driving the oil prices higher. This is an opportunistic time to grab these potential money makers before it is too late.


Top 11 Oil Recovery Links Refered to in this Post