U.S. oil prices punched above $80 a barrel on Friday, poised to clock their first six-week advance in 2023. Energy stocks, including Baker Hughes, Tidewater and Diamond Offshore have been market leaders during that period as investors anticipate a cyclical turn. Technical indications suggest prices could move higher, if news regarding supply, stockpiles or demand in China turns bullish.
Energy stocks topped the market in 2022, after Russia's Ukraine invasion upended global energy markets. Oil prices, and many energy stocks, have fallen off this year, dragged lower as global markets stabilized. However, U.S. oil prices have climbed and held back above the psychologically important $80 per barrel level. Many analysts expect a move higher in coming months.
Those circumstance are just the kind of thing to trigger speculation of a cyclical oil industry rebound, and send energy stocks back to the head of the market. In recent weeks, here are some of the names that have shown the most positive action.
Energy Stocks To Watch: U.S. Producers
The IBD-tracked Oil & Gas-Machinery/Equipment industry group has outperformed the S&P 500 in 2023, gaining about 25% so far this year. Cactus and Baker Hughes are in the that group.
WHD shares are only up around 6% so far in 2023. But they have spent much of the year forming a deep cup-with-handle base with a 53.85 buy point, according to MarketSmith analysis. Shares are now up 70% from an early June low, and 1% below the base's entry.
Meanwhile, BKR has been trading tightly the past five weeks and has a buy point at its 2023 high of 36.48. Investors could have plotted an early entry opportunity at 35.62 (which can also be viewed as a handle to a long consolidation). Shares are up about 23% for the year.
Oilfield Service Firms Gain Strength
The Oil & Gas-Field Services group is barely 1% higher in 2023. But SLB, formerly known as Schlumberger, has climbed almost 32% from a June low and has formed a cup-with-handle base with a 58.70 buy point. The stock has broken above a downtrend in the handle. It is also rebounding from a test of support at its 10-week moving average.
Fellow oilfield services giant Halliburton has also formed cup-with-handle base. It is sitting around 10% below a 43.42 entry, according to MarketSmith.
Meanwhile, Tidewater broke out above a 51.88 buy point on June 30. It is now rebounding from 10-week support, trading within a 59 - 64.90 buy zone.
The year has so far shown unenthusiastic outlooks for production and capital expenditure increases. As a result, the Oil & Gas Drilling group is down more than 6% for the year. But there are more than a few bright spots in that picture.
Diamond Offshore Drilling has soared more than 52% since the start of the year. The energy stock is currently consolidating, extended after a late-June breakout and attempting to retake support at its 10-week moving average.
And of course there is also energy giant ExxonMobil. The overall Oil & Gas-Integrated industry group is down around 1% on the year. But ExxonMobil has treaded water, up just a fraction for the year. But the heavyweight energy stock is currently in a cup base with a 119.92 buy point.
Oil Prices: Poised For A Jump?
West Texas Intermediate (WTI) oil prices jumped gained another 1% early Friday, with futures trading near $85 per barrel, and on track for a seven-session advance. Prices are also tracking toward a sixth straight weekly close above $80, a first in 2023.
That puts WTI above its early August high, to its strongest price since November.
A number of factors, including China's disappointing economy recovery after removing its Covid restrictions late last year, have weighed on recent oil prices. But the country reported manufacturing activity contracted less than expected in August and launched a series of economic support initiatives, with another round landing on Friday.
Russia also signaled it would extend production cuts it had agreed to as part of the OPEC+ coalition.
On the technical side, recent oil price action has shown volume favoring rebounds, weakness on declines, according to Standard Chartered analysts.
"In our view, the market is not trading in a way that suggests much conviction in substantial, sustainable downside," Standard Chartered analysts noted to Rigzone Tuesday.
"Further, low volatility coupled with difficulty in sustaining downward momentum often signals an impending upside break," the analysts wrote.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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