Oil Stocks Surge As Crude Prices Jump 3.4%; Energy Market Flashes Positive Signals

Zinger Key Points
  • Oil stocks rallied on Wednesday driven by sharp oil gains on the back of bullish headlines.
  • Halliburton Company was the best performer of the day, while Chevron relatively underperformed among large-cap oil stocks.

U.S. oil company stocks are rallying in Wednesday's session, with the Energy Select Sector SPDR Fund XLE up 2%, fueled by a 3.4% increase in WTI crude oil prices as a result of a confluence of positive headlines over the past few weeks.

On Monday, the U.S. Department of Energy announced the purchase of up to three million barrels of crude oil for delivery in August to begin replenishing the Strategic Petroleum Reserve (SPR). It will be the first time the U.S. purchases oil after the reserve fell to its lowest level since September 1983 and declined by nearly 300,000 barrels since July 2020.

Also Read: US Debt Crisis, Chinese Demand Worries Drag Oil Prices In Early Trade: What You Need To Know

The International Energy Agency (IEA) made an upward revision to its forecasts for global oil demand by 200 thousand barrels per day (bdp) to a record of 102 million bpd this year, which may surpass global supply by 2 million bpd in the second half of 2023, leading to a tighter oil market.

The oil market also responded positively to U.S. Energy Information Administration (EIA) data, which showed a 5 million barrel gain in U.S. commercial crude oil stockpiles from the previous week, well above market forecasts of a 0.92 million decline.

Oil Stocks Movers On Wednesday

Almost all of the Energy Select Sector SPDR Fund's portfolio constituents were in the green on Wednesday, with the sole exception of EQT company EQT, which was just marginally down for the day. Oil service companies, which are tracked by the VanEck Vectors Oil Services ETF OIH, and those engaged in exploration and production, which are tracked by the SPDR S&P Oil & Gas Exploration & Production XOP, reported similar gains of 2.2%. 

  • Halliburton Company HAL was the day's best performer among oil companies, up 4%, fully erasing losses recorded on Tuesday. 
  • Marathon Petroleum Corp. MPC rose 3.6%, while Marathon Oil Corporation MRO rose 3.4%. 

Exxon Mobil Corporation XOM, the biggest U.S. oil company and the most representative in the XLE portfolio with a 23% weight, gained 2.3%. 

Chevron Corp. CVX, with a weight of 19% in the XLE portfolio, undeperformed, rising 1.5%. 

Now Read: BP Unit Slapped With $40M Fine For Air Pollution Charges At Indiana-Based Refinery

Photo: Shutterstock

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