With West Texas Intermediate crude oil putting in another strong day, a gain of more than $2 per barrel has put the price of benchmark crude back above $68.50 per barrel. This marked the highest level going back to when oil prices were falling rapidly in the second half of 2014.
With oil coming back in vogue, most investors might just automatically assume that the large oil stocks are all surging. Most were up on Wednesday with the commodity price, but it is surprising to see just how many companies in the S&P 500 tied to energy and oil and gas are still negative on a total return basis (share price and dividends) year to date in 2018.
U.S. crude oil production already had been challenging 10 million barrels per day by the end of 2017. Now that production has continued to surge past the peak production of late in 1970. After rising more than 400,000 barrels per day by the end of March, a recent updated forecast from Criterion Research expects that oil production will keep growing to perhaps more than 11.1 million barrels per day equivalent toward the end of 2018.
Investors need to understand that many oil producers already have locked in prices now for the months ahead (or longer). That would imply that domestic oil production could keep rising even if the price of oil in the financial markets were to soften further.
It turns out that the two largest domestic oil and gas companies are also down or will be down for 2018, if there is any additional sell-off after Wednesday.
Chevron Corp. (NYSE: CVX) was last seen trading up 2.3% at $124.30 on Wednesday, but that is barely up from the adjusted closing price of $123.96 from December 29. When the market and energy stocks were doing well, the stock went as high as $133.00 before bad earnings dragged it down. Chevron shares have a 52-week trading range of $102.55 to $133.88 and a consensus analyst target price of $135.88. Chevron has a 3.7% dividend yield and a $238 billion market cap.
Exxon Mobil Corp. (NYSE: XOM) was last seen trading up 1.5% at $79.55 on Wednesday, but that was still down about 4% so far in 2018, and the shares had even tried to challenge the $90 mark before peaking in late January and the first day of February. Exxon has a 52-week range of $72.16 to $89.30 and a consensus target price of $85.98. It also has a 3.9% dividend yield and a $337 billion market cap.
If you count Exxon Mobil in the red, 24/7 Wall St. used a Finviz screen identifying nine other companies tied to oil and gas that are S&P 500 members and with shares still negative for 2018. We have identified the drop prior to Wednesday’s move, identified their 52-week range and consensus price target from Thomson Reuters, and included their market cap and dividend yields so investors can see a larger picture.
These year-to-date losers have been listed in order of the worst performing shares first.
Cimarex Energy Co. (NYSE: XEC) was last trading 4% higher over the past month, but its shares were still down 21% so far in 2018. Cimarex was up 5% on Wednesday afternoon at $101.44, in a 52-week range of $87.98 to $130.16 and with a consensus target price of $135.94. It has a 0.7% dividend yield and nearly a $10 billion market cap.