Oil Prices Continue to Fluctuate: What to Look Out For

As you may have noticed, oil prices have fluctuated over the past few weeks. Naturally, this leads to oil stocks fluctuating as well. 

For example, PBF Energy Inc (NYSE: PBF), shown in purple, and BP PLC (NYSE:BP), shown in blue, have had a rough last three months, given how closely their share prices and oil prices are tied together.

6-month chart for PBF (purple) and BP (blue); charts courtesy TradingView 

For those invested in either company or some other energy stocks, these are not great charts to see. Yet why are waters complex for some energy companies?

Uncertainty can create these stock prices. Occidental Petroleum Corp (NYSE: OXY) has been down in light of energy price uncertainty, for example.

Over the last week, oil prices have started to decline, with tensions and conflict in the Middle East easing slightly. Investors and the oil industry were concerned about the prospect of greater conflict and targeted attacks from Israel on Iran’s oil infrastructure, spiking prices for a time. This has eased somewhat since the initial fears, though it remains a possibility.

Recent rumors and reports of Iran planning an attack against Israel using militias and drones have increased oil prices in the past few days, however, over the same fears of escalation. 

We can’t forget that today is election day, and there’s no denying that U.S. foreign policy will heavily affect oil prices and the stability and accessibility of oil-producing regions. Additionally, both candidates wish to increase energy production, but in different ways:

• It is expected that Donald Trump will have better relations with Russia than the Biden administration, potentially leading to more oil coming directly from the country. Additionally, increased oil production from areas that are currently protected from drilling and related exploration may occur.
• Kamala Harris will likely instead support efforts to increase renewable energy research and implementation. This could reduce the demand for oil in the long term and increase supplies of domestic renewable energy.

There are talks about OPEC+ delaying their planned increase in production in December, concerns over which have increased prices lately.

Note that some companies vary from the trend for reasons beyond oil price and energy price trends. Some companies' earnings were not up to expectations. Others, such as Chevron Corp (NYSE: CVX) and Exxon Mobil Corp (NYSE: XOM), have done relatively well (if not stellar, given the greater trends) due to beating analyst earnings and revenue estimates. 

The Takeaway: Watch upcoming events closely. The election and geopolitical affairs themselves could each heavily sway energy and oil stock prices, and neither is determinable yet. However, WallStreetZen Premium can help you find the most reliable energy stock options and provide updates to stocks you’re following. Use features like an unlimited watchlist and access to dozens of due diligence checks on thousands of stocks to help you navigate these uncertain times. 

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