Oil stocks to watch

Trading oil stocks can be an effective way to gain exposure to crude oil without purchasing the physical commodity. Oil shares reflect companies that are involved in the exploration, refining and transportation of crude oil on an international level. Join us as we discuss some of the top oil and gas company stocks to watch right now.

An overview of the oil and gas market

Oil has been the world’s most important source of energy since the 1950s. Fossil fuels such as petroleum can be used to power various modes of transportation, and petrochemicals can be used to make materials such as plastic and rubber. Natural gas is also vital for generating heat and electricity for commercial and residential buildings.

For these reasons, crude oil is one of the most popularly traded commodities. There are two main types that are traded around the world: Brent Crude Oil and West Texas Intermediate (WTI) Crude Oil. It is possible to invest in oil directly through purchasing oil spot or futures contracts; however, this requires the investors to pay additional costs for storage and transportation of the oil.

Another way of gaining exposure to crude oil is through speculating on oil stocks. Oil companies usually engage in at least one of the following activities:

Upstream exploration and production (E&P) of oil and gas.
Midstream transportation, processing and storage of crude oil, petroleum products and natural gas liquids, such as ethane and propane.
Downstream refining and distribution of oil-related products, such as gasoline, diesel and jet fuel.

The world’s largest E&P companies form The Organization of the Petroleum Exporting Countries (OPEC), which is an intergovernmental organisation of 13 nations that are global leaders in oil and gas production. Led by Saudi Arabia, the list also features Iraq, United Arab Emirates, Venezuela, Iran and Kuwait. OPEC works together to coordinate each country’s oil prices and level of production, whose actions often have an volatile effect on oil prices and the stock price of oil companies worldwide.

What drives oil stock prices?

There are a number of external factors that can have a major impact on the price of oil stocks, which are explained in detail below.

Supply and demand are the main drivers of oil and gas prices. When there is a higher demand for oil, its price will usually increase, while it may fall if there is a higher supply.

Costs of the exploration and extraction of oil. This can be an expensive process and major oil companies tend to invest in new operations and projects on a regular basis. It is important to keep costs low, otherwise they may supersede the company’s profits.

Production and reserves can shape the value of a company. Oil production is often measured in barrels of oil equivalent (BOE) and the company should have decent reserves if it wants to continue distributing to other regions over the long-term.

Volatility from disagreements regarding production levels between OPEC and non-OPEC countries. An example is the 2020 Russia-Saudi Arabia oil war, where Brent crude oil prices fell to a 17-year low of under $26 per barrel. Another example is from 2014 when OPEC shifted its production policy to undercut US shale oil producers, which, in turn, crashed the oil price.

Cash flows need to be relatively stable to balance out its other production costs. If a company consistently uses debt to pay for its operations, this may lower its value and investors may see it as having less strong company fundamentals.

Natural disasters such as changing climate conditions and health crises. An example is the Covid-19 pandemic, which contributed to the drastic drop in oil prices in March 2020.

Geopolitics can influence the price of oil, with any rising tensions in the middle east (which is the main region exporting oil) or expectations of a conflict in the region potentially having an impact on the price of oil.

How to trade on oil shares

Open a live account.
Choose your way of trading. Spread betting is our most popular trading method, which is tax-free in the UK*, whereas oil CFDs are available globally but require you to pay capital gains tax. Both ways of trading are exempt from stamp duty.
Browse our product library. You can filter by sub-type, region and specific country to browse over 350 shares that we offer within the energy sector.
Pick a strategy. Decide whether to go long (buy) or go short (sell).
Consider risk-management controls. If the stock market or oil prices are particularly volatile, it may be a good idea to implement stop-loss orders on open positions in order to reduce losses as much as possible.

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Oil stocks to watch

Below are some of the top oil and gas stocks per country, according to their market capitalisation and annual revenue. The majority of these shares are available for spread betting or CFD trading on our Next Generation trading platform. You can view spreads, margin rates, holding costs and additional trading details on each individual instrument page.

Stock by country	Company 1	Company 2	Company 3
Australian oil stocks	BHP	Santos	Woodside Petroleum
Canadian oil stocks	Enbridge	Canadian Natural Resources	Suncor
Chinese oil stocks	Sinopec	China National Petroleum Corporation	China National Offshore Oil Corporation
French oil stocks	Total	Engie
Japanese oil stocks	ENEOS Holdings	Idemitsu Kosan	JAPEX
Russian oil stocks	Lukoil	Gazprom	Rosneft
Saudi Arabian oil stocks	Saudi Aramco
Spanish oil stocks	Repsol	CEPSA
UK oil stocks	BP	Petrofac	Tullow Oil
US oil stocks	Phillips 66	ExxonMobil	Marathon Petroleum

What are the seven Big Oil companies?

Big Oil refers to the seven largest publicly traded oil and gas companies in the world, which are also referred to as oil supermajors. The term reflects stocks from a Western economy only and does not take into account OPEC companies from emerging markets that have a more global role in setting oil prices. In fact, Big Oil companies only account for approximately 6% of oil and gas reserves worldwide; however, their shares are much more accessible to Western traders, unlike oil giants such as Sinopec and Saudi Aramco. The seven stocks listed below are well-known for paying fairly high and consistent dividends to shareholders throughout the years.

BP (BP)

BP is a British company that explores, produces and refines oil. Headquartered in London, it produces around 2m barrels of crude oil liquid and 8bn cubic feet of natural gas per day on average. The business also holds a 20% ownership of Russian oil and gas company Rosneft. BP has reported 18bn barrels of oil equivalent in reserves at the end of 2020. It is working towards becoming carbon neutral by 2050 and has plans to invest in more methods to produce clean, sustainable and renewable energy, given the current ESG trend.

Chevron (CVX)

Chevron is an integrated energy corporation with headquarters in California, serving over 180 countries. The company produces around 3.1m BOE per day, as well as over 7m cubic feet of natural gas. At the end of 2020, Chevron reported reserves of 11.1bn barrels of liquids and 29.9trn cubic feet of natural gas. It has paid a consistent dividend to shareholders for many years, even throughout the troubling Covid-19 crisis, possibly making it a more attractive investment.

ConocoPhillips (COP)

ConocoPhillips is one of the largest E&P-focused companies in the world and Alaska’s largest crude oil producer. The business engages in hydrocarbon exploration and has approximately 1.3m net undeveloped acres. ConocoPhillips has headquarters in Texas and operates across 15 countries. In 2020, the company was producing 694,000 barrels per day of crude oil and natural gas liquids and 2.2bn cubic feet of natural gas. It also has low supply costs, meaning that its cash flows remain relatively stable when oil prices lower.

Eni (E)

Eni is an Italian oil and gas explorer, producer and refiner that is headquartered in Rome. In 2020, the company produced around 0.8m barrels of liquid and 4.7bn cubic feet of natural gas per day. It also reported having reserves of almost 7bn barrels of oil equivalent. Eni operates in 66 countries worldwide, also producing end products such as chemicals and gasoline. Interestingly, the Italian government owns a 30% stake in the company, which can deter some investors as the government’s stance on energy and renewables may have an influence on the company’s operations overall.

ExxonMobil (XOM)

ExxonMobil is a US company that is a descendant of Standard Oil, which was the largest oil refiner in the world at its peak. Headquartered in Texas, the company produces around 2.3m barrels of liquids and 8.5bn cubic feet of natural gas per day. In 2020, it had reserves of 15.2bn BOE. ExxonMobil is the world’s largest refiner of crude oil, with a capacity of 4.8m barrels per day. It also manufactures commodity and specialty chemicals. Almost 50% of total production comes from the business’s long-term assets and it has managed to keep low cost reserves over recent years, fuelling its success.

Royal Dutch Shell (RDSA)

Royal Dutch Shell is an Anglo-Dutch producer and refiner of oil with headquarters in The Hague, Netherlands. In 2019, it produced 2m barrels of liquids and 11.4bn cubic feet of natural gas per day, and reserves stood at over 11m barrels of oil equivalent. Similar to BP, the company is expanding a cleaner and sustainable energy route to go along with its streaming divisions, producing 100% renewable electricity through its subsidiary, Shell Energy. The company cut its dividend in 2020 due to the Covid-19 crisis taking a toll on the business.

Total (TTE)

Total is a French oil and gas company that operates in over 130 countries and has headquarters in Paris. It produces around 1.7m barrels of liquids and 7.3bn cubic feet of natural gas per day, with reserves of approximately 12bn BOE. Total holds a 19% interest in Russian oil company Novatek. Another company that is dedicated to its renewable energy sector, the business also owns subsidiaries such as SunPower, Greenflex and Lampiris, which focus on green power and electricity.

Oil & Gas share basket

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What are the risks of trading oil stocks?

The oil industry is described as cyclical, meaning that it follows trends in the overall economy. The market may thrive for a long period of time and oil prices increase, which is then followed by a long period of declines. This is often unpredictable.
Oil prices fluctuate depending on supply and demand, as well as other geographical, political and economic events.
OPEC nations tend to set oil prices, which can affect share prices of other companies that are not involved with the organisation.
Oil and gas production comes with risks relating to safety, whether this be environmental disasters or transportation of the commodity. An example is the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, which was caused by BP, which increased negative investor sentiment at the time.

Read our risk-management guide to learn how to control risks when speculating on the price movements of oil shares.

The future of oil stocks

There is often debate around the future of oil stocks and oil as a commodity in general. It is expected that oil reserves and deposits will run out between 2050-2060, so where will this leave oil companies? This may explain why Royal Dutch Shell, Total and other oil giants have started to expand their business portfolios to include renewable energy development, such as solar and wind energy, as well as non-renewable fossil fuel alternatives such as uranium. In particular, renewable energy stocks are becoming top performers in the stock market, with companies like Tesla, First Solar and NextEra Energy witnessing increasing revenues year-on-year. That said, some of the biggest companies in the UK belong to the oil and gas industry, which proves that the sector is profitable for the time being.

FAQ

What are the largest oil companies in the world?

Some of the largest oil companies in the world include Sinopec, CNPC and Saudi Aramco, which are then followed by oil supermajors such as Royal Dutch Shell, BP and ExxonMobil. This list accounts for some of the UK’s biggest companies.

Can you invest in oil directly?

It is possible to purchase oil commodity contracts outright at spot or futures prices. You can also speculate on the price movements of crude oil through derivative products such as spread bet and CFDs. Learn how to trade oil with us.

Do oil stocks pay dividends?

Oil stocks are well-known for their consistent dividend payouts to shareholders, particularly ExxonMobil and Chevron, which makes them an attractive investment. This may be due to their status as blue-chip stocks, which are generally considered to be financially stable and profitable.

What are oil ETFs?

Oil exchange-traded funds (ETFs) allow you to gain exposure to crude oil through speculating on the price movements of the physical commodity or a number of stocks involved in the oil and gas market. Learn more about how ETFs work.

How can I start trading oil stocks?

To start trading on the price movements of oil stocks, open a live CFD trading account. Both products require the use of margin or leverage, so it is important that you understand the process before placing a trade.

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