This is a guest contribution from The Dividend Manager
Energy stocks have seen a lot of volatility over the last two years as the supply of oil increased and the price of oil plummeted. In 2014, the price of a barrel of Crude Oil WTI was over $100. By the beginning of 2015, the price was under $50 per barrel. The final bottom in price occurred earlier this year when crude hit $25 a barrel. The chart below illustrates the downfall of crude oil prices since 2012. While the price has rebounded since the February lows, it has not come close to rebounding to its 2014 price high.
On November 30th, 2016 the Organization of Petroleum Exporting Countries (OPEC) agreed to cut crude oil production by 1.2 million barrels a day. Currently, production is at a record high, at 33.6 million barrels per day. This will be the first cut in production since 2008, but there is still expected to be a significant surplus in oil supply. This production cut will likely drive up the price of Crude Oil WTI and make many energy companies more profitable.
The news sent many energy stocks soaring.The Energy Select Sector SPDR ETF (NYSE: XLE) jumped over 5% following the news (compared to year-to-date performance of +10%).This bump comes after many of these stocks jumped as part of the “Trump Rally” following the election, and has many energy investors excited about current performance and how the new production may impact oil prices going forward. WIth large tax cuts and decreased regulation on the way in 2017, many of the energy companies listed below should profit from increased economic growth.
The stocks below are the energy stocks that I maintain on our Top 100 Dividend Stocks list. My favorites include Occidental Petroleum, Schlumberger, Total SA ADR, and Valero. While some investors have been spooked by the energy sector in the last two years, there are many intriguing stocks with high dividends & excellent dividend growth prospects now that oil has crossed back above $50 a barrel.