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The Zacks Analyst Blog Highlights: ExxonMobil, Chevron, National Oilwell Varco, HollyFrontier and Halliburton

Zacks Equity Research
·6 min read

For Immediate Release

Chicago, IL – May 22, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: ExxonMobil XOM, Chevron CVX, National Oilwell Varco NOV, HollyFrontier HFC and Halliburton HAL.

Here are highlights from Thursday’s Analyst Blog:

Oil Prices Hit Multi-Week Highs: Where Are They Headed Next?

U.S. oil prices settled at a 10-week high on Wednesday after a weekly report from the Energy Information Administration ("EIA") revealed that domestic crude stockpiles fell unexpectedly, led by a big drawdown at the storage hub in Cushing. On the New York Mercantile Exchange, July WTI crude rallied $1.53, or 4.8%, to settle at $33.49 a barrel, the highest settlement since Mar 10.

Investors Lap Up Energy Stocks

The federal data sparked widespread buying in energy stocks, which pushed the Energy Select Sector SPDR – an assortment of the largest U.S. energy companies – up 4% Wednesday. The two energy representatives in the 30-stock Dow Jones industrial average, ExxonMobil and Chevron - both carrying a Zacks Rank #3 (Hold) - gained more than 3% each. Meanwhile, some of the biggest gainers of the S&P 500 included energy-related names like National Oilwell Varco, HollyFrontier and Halliburton.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Now, let’s turn our attention to the latest figures from the EIA.

Analyzing the Latest EIA Report

Below we review the EIA's Weekly Petroleum Status Report for the week ending May 15.

Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 5 million barrels, versus expectations for a 2.4 million barrels increase. A drop in domestic production and increased refining activity accounted the surprise stockpile decrease with the world's biggest oil consumer. This puts total domestic stocks at 526.5 million barrels – still 10.4% above the year-ago figure and 10% over the five-year average.  

The latest report also showed that supplies at the Cushing terminal in Oklahoma (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) was down 5.6 million barrels to 56.9 million barrels.

The crude supply cover was down from 42 days in the previous week to 41.3 days. In the year-ago period, the supply cover was 28.9 days.

Let’s turn to products now.

Gasoline: Gasoline supplies tallied an increase for the first time in four weeks. The fuel’s 2.8 million barrels build is attributable to lower demand. Analysts had forecast 3.5 million barrels fall. At 255.7 million barrels, the current stock of the most widely used petroleum product is 11.8% higher than the year-earlier level and is 10% above the five-year average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) jumped for a seventh straight week. The 3.8 million barrels increase reflected a dropoff in demand. Meanwhile, the market had been looking for a supply build of 3.2 million barrels. Current supplies — at 158.8 million barrels — are 25.6% higher than the year-ago level and 19% above the five-year average.

Refinery Rates: Refinery utilization was up 1.5% from the prior week to 69.4%.

Conclusion

Overall, oil supplies have been steadily dwindling as easing lockdown measures improve the demand outlook. Further, the report was supportive in terms of U.S. producers scaling back operations and refinery runs rebounding from coronavirus lows.

The bullish data points in the report notwithstanding, investors still remain worried of the supply glut. In total, U.S. commercial stockpiles are up by more than 16% since March, while domestic fuel demand remains weak. As it is, a build in both gasoline and distillates inventories in the latest report kept traders worried.

Moreover, refinery utilization in the United States is still close to its lowest level ever, while Cushing oil storage tanks are nearly 75% full. As a proof of the demand destruction, EIA estimates U.S. oil consumption in 2020 is expected to plunge by 2.2 million barrels per day to 18.29 million barrels per day.   

Therefore, while the current trend for crude is slowly turning positive, serious questions remain about the future direction of oil.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.


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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
National Oilwell Varco, Inc. (NOV) : Free Stock Analysis Report
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
Halliburton Company (HAL) : Free Stock Analysis Report
 
HollyFrontier Corporation (HFC) : Free Stock Analysis Report
 
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