Are Oil Stocks A Buy Right Now?

Key Takeaways

• As a commodity, oil is known for its extreme volatility.
• Oil stocks represent an opportunity to add exposure within the energy section to your portfolio.
• Overall, many oil stocks have posted rising prices for 2022, see list of securities below.

Over the last year, rising gas prices have been hard to ignore. Regardless of how often you drive, your regular top-up cost has increased. For frequent drivers, the pain is especially intense.

As an investor, you might be considering adding oil stocks to your portfolio. We will explore what’s going on with oil stocks and whether or not they are a good buy right now.

Oil Stocks Overview

Oil is a commodity that the world heavily relies on to power energy needs.

According to the latest Consumer Price Index (CPI) report, the price of energy commodities has risen by 12.2% since this time last year. The rising costs are across different types of energy commodities.

However, when it comes to oil prices, an extreme amount of volatility makes it difficult to know which direction the commodity is heading.

Some popular oil stocks include ExxonMobil, Shell, Marathon, and Occidental Petroleum, but nailing down if any are the right buy for your portfolio requires a deeper dive into the details.

The big picture of oil stocks is messy. In recent years, the advancements made by clean energy created long-term questions about the future of oil stocks. As of now, oil is still an essential resource for energy production.

Although oil is used to meet many of the world’s power needs, that doesn’t mean investors are happy about supporting oil companies. Instead, many investors purposely seek ways to avoid investing in oil companies through ESG investment strategies.

ESG stands for environmental, social, and governance. Investors that opt for this strategy choose stocks that prioritize sound environmental practices. One of the ways investors prioritize the environment is by investing in clean energy technology instead of oil companies.

Nevertheless, as some investors shift away from oil stocks, others want to lean into the historically strong oil company stocks.

Are oil stocks a buy right now?

Many factors will play into your decision about whether or not to add oil stocks to your portfolio. Here’s a closer look at some of those considerations.

Volatility

If you regularly monitor oil as a commodity, you’ll quickly realize that oil prices are incredibly volatile. In the worldwide marketplace, a seemingly minor event in one country can send a ripple effect through oil prices everywhere.

With the world facing multiple geopolitical threats, including the Ukrainian war, oil prices are incredibly volatile.

Throughout 2022, oil stocks have seen an upward trajectory. Many attributed these rising prices partly to the war between Russia and Ukraine. However, crude oil prices have dropped quite a bit from their high point earlier in the year.

Clean energy

In terms of oil’s outlook as an energy source, it seems that the transition to clean energy will be both slow and steady, mostly steady.

Although there has been an increasing focus on transitioning to clean energy sources, the technological and infrastructure requirements involved in making the switch mean that oil will also maintain a position of importance in our economy for years to come.

In this light, it’s worth pointing out that a well-diversified portfolio will include exposure to the energy sector as a whole, and how you weight that balance might be the best question.

With that, buying oil stocks might still be an essential part of your investment strategy.

Oil stocks to consider

When considering oil stocks, there are plenty of options. Here’s a look at some of the top oil company stocks.

• ExxonMobil Corporation (XOM): ExxonMobil opened at $105.25 per share today, up 65.71% year to date. For the year, the company boasts a climbing stock price.
• Shell plc (SHEL): Shell opened at $56.21 per share today, up 24.84% year to date. The company is acquiring a Danish company, Nature Energy Biogas, which gives it more resource diversity.
• Marathon Petroleum Corporation (MPC): MPC opened at $110.63, up 69.84% year to date.
• Occidental Petroleum Corporation (OXY): Occidental Petroleum opened at $62.80, up 100.8% on the year. It also paid out a dividend of $.13 on December 9th.

How to include oil stocks in your portfolio

Oil stocks might be the right fit for your portfolio goals. Nevertheless, the heightened volatility might mean you must keep a closer eye on industry changes to make the necessary portfolio adjustments.

If you don’t have the time or energy to keep up with oil stocks, that’s okay. You can get exposure to the energy industry without constantly monitoring the market with the help of artificial intelligence (AI).

Q.ai offers Investment Kits that are managed using artificial intelligence.

Our artificial intelligence scours the markets for the best investments for all manner of risk tolerances and economic situations. Then, it bundles them up in Investment Kits that make investing simple and strategic.

Best of all, you can activate Portfolio Protection at any time to protect your gains and reduce your losses, no matter what industry you invest in. For example, you could invest through Q.ai’s Clean Tech investment kit, which focuses on developments in the transition to clean energy.

The Bottom Line

Oil is a volatile commodity. Investing in oil company stocks will give you exposure to the energy industry.

But, as an investor, opting to harness the power of AI can make it easier to build your investment portfolio.

Download Q.ai today for access to AI-powered investment strategies. When you deposit $100, we’ll add an additional $100 to your account.