Last week, we reported that the Organization of the Petroleum Exporting Countries had decided to cut oil production by 100,000 barrels per day to go back to the August quotas, as the increase was only for September. Now OPEC is starting to sing a far different tune, as both Brent and West Texas Intermediate crude are down close to 30% from intraday highs posted back in March. The cuts that may be coming will not be just 100,000 barrels per day.
The energy team at J.P. Morgan has been watching the energy complex pricing closely. While both Brent and West Texas Intermediate were up over 3% on Friday, the analysts feel there is a solid chance that OPEC will step in big, and possibly make a loud statement for maintaining and protecting pricing. J.P. Morgan had this to say:
OPEC is likely to step in with additional cuts if oil downward momentum persists. Monday’s OPEC+ meeting reinforces our view that upcoming agreements will seek to align the market with underlying fundamentals and encourage future investment. Given heightened volatility and a further fall in oil prices since the cut was announced (Brent down 8% month to date as we write), we believe further intervention may be necessary and suggest a cut up to 1 million barrels-per-day may be needed to stem the downward momentum in prices and realign physical and paper markets which appear disconnected.
One million barrels per day is not inconsequential, and that could have a very positive effect for energy investors and energy pricing going forward. We screened our 24/7 Wall St. energy research database looking for energy stocks, both oil and natural gas related, that paid at least a 6% dividend, are rated Buy at top Wall Street firms and look like they have solid upside potential.
Six stocks hit our screens. While they all offer tantalizing value, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Cheniere Energy Partners
This is a solid idea for investors looking to grab shares of a company with a more extensive liquefied natural gas (LNG) presence. Cheniere Energy Partners L.P. (NYSE: CQP) owns and operates a natural gas liquefaction and export facility at the Sabine Pass LNG terminal located in Cameron Parish, Louisiana.
The company’s regasification facilities include five LNG storage tanks with an aggregate capacity of approximately 17 billion cubic feet equivalent; two marine berths that accommodate vessels with capacity of up to 266,000 cubic meters; and vaporizers with regasification capacity of approximately 4 billion cubic feet per day. It also owns a 94-mile pipeline that interconnects the Sabine Pass LNG terminal with various interstate pipelines. Cheniere Energy Partners GP serves as the general partner of the company.
Cheniere Energy Partners stock investors receive a 6.46% dividend. Evercore ISI’s $55 target price may be headed higher soon. The consensus target of analysts is $52.77, and shares closed on Friday at $57.28, which was up over 7% for the day on no news we could find.
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