The best oil and gas stocks to buy are those that can adapt. Recently, U.S. crude oil storage increased in the first week of June as production and importation numbers increased amid decreased exports according to the U.S. Energy Information Administration.
Roughly 3.7 million barrels of crude oil were added to America’s commercial reserves, while there are worries that an oil glut may bottom out the value of crude oil.
This represents a very different trend than a few months ago when many, including myself, postulated a gentle rise in oil prices was on the horizon due to the proxy war between Israel and Iran. Now, even OPEC seems unable to prevent a supply glut, as the U.S. and the other countries in the Americas increase production.
These trends are driving increased speculation on the best oil and gas stocks to buy, as investors bullish on the industry attempt to predict how crude oil prices will impact the classical global oil and gas giants.
Chevron (CVX)
Regardless of the price of crude oil, Chevron (NYSE:CVX) has a bright future on the horizon from a business outlook perspective. That’s because even if oil prices tumble, it will just mean a better buying opportunity for investors. The company on the other hand, serves both domestic and international markets with its widely distributed extraction wells.
Furthermore, the company remains focused on expansion, as it closes its acquisition of Hess (NYSE:HES) and looks on to its next opportunity in Algeria. As of June 13, 2024, Chevron and Algerian energy giant Sonatrach have signed an agreement to develop Algeria’s hydrocarbon resource extraction.
Pair these expansions with its 4.29% dividend yield and CVX provides a continuous stream of cash dividends for re-investment in its expansion. Thus, investors would be wise to consider CVX as one of the best oil and gas stocks to buy.
Equinor (EQNR)
In case a potential oil glut worries you, Equinor (NYSE:EQNR) and its push towards renewable energy and ocean floor exploration could be a better bet. Growing from its history as the Norwegian state oil company, Equinor now hedges its bets on a growing wind energy portfolio. This transition has cemented Equinor as the largest renewable energy supplier in Europe for 2024.
This comes as the company continues to strategically manage Norway’s oil reserves and cooperates with Norway’s sovereign fund to keep the country’s economy strong. Pair this with Norway’s relative insulation from the broader European market, thanks to its wise decision to remain out of the European Union, and Equinor starts to look like a safe long-term prospect.
Even more intriguing, the company continues developing its carbon capture and storage technologies for lowering its operations emissions. With these characteristics in consideration, EQNR is a moderate “buy” among the best oil and gas stocks to buy.
Schlumberger (SLB)
Schlumberger’s (NYSE:SLB) offshore extraction business model may seem dated in the face of dropping oil prices and rising production, but the company will likely continue to perform well so long as oil prices don’t go below $50 a barrel. That’s because 85% of SLB’s major financial investment decisions have a breakeven point of $50 per barrel of oil.
That means that up to that point, it would be profitable unless prices drop around $30 less than its current price of around $80 a barrel.
Thanks to these diverse and well-managed resource extraction plays, SLB will likely remain relevant enough to diversify its energy positions in the long run, should oil extraction become unprofitable over time.
Ultimately, investing in SLB requires patience and confidence in its management structure, unless oil prices drop below $50 a barrel overnight as they did during the COVID-19 pandemic. In that case, no oil company will be too expensive to buy stock of.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.