The Zacks Analyst Blog Highlights: Marathon Oil, Diamondback Energy, EOG Resources, Hess Corp and Apache

·6-min read

For Immediate Release

Chicago, IL – June 18, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Marathon Oil Corporation MRO, Diamondback Energy, Inc. FANG, EOG Resources, Inc. EOG, Hess Corporation HES and APA Corporation APA.

Here are highlights from Thursday’s Analyst Blog:

U.S. Oil Extends Climb to 32-Month High on Demand Recovery

U.S. oil prices finished at their highest levels in more than two and a half years after a weekly report from the Energy Information Administration ("EIA") showed a big stockpile draw. The fourth straight fall in domestic oil stocks was accompanied by a decrease in distillate inventories.

However, the commodity pared back some of its gains after a stronger dollar made the fuel more expensive to the holders of other currencies. The greenback gathered steam when the Federal Reserve hinted at an interest rate hike.

On the New York Mercantile Exchange, WTI crude futures edged up 3 cents or 0.04%, to settle at $72.15 a barrel, its highest finish since October 2018.

Below we review the EIA's Weekly Petroleum Status Report for the week ending Jun 11.

Analyzing the Latest EIA Report

Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 7.4 million barrels compared to expectations of a 4.2-million-barrel decline. An uptick in refinery demand coupled with sharply higher exports accounted for the larger-than-expected stockpile draw with the world’s biggest oil consumer. This puts total domestic stocks at 466.7 million barrels — 13.5% less than the year-ago figure and 5% lower than the five-year average.

On a further positive note, the latest report showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) were down 2.2 million barrels to 43.6 million barrels.

Meanwhile, the crude supply cover was down from 30.6 days in the previous week to 29.6 days. In the year-ago period, the supply cover was 40.4 days.

Let’s turn to the products now.

Gasoline: Gasoline supplies increased for the third week in a row. The 2-million-barrel addition is attributable to an increase in production even as demand grew. Analysts had forecast that gasoline inventories would remain unchanged. At 243 million barrels, the current stock of the most widely used petroleum product is 5.4% less than the year-earlier level and hovering around the five-year average range.

Distillate: Distillate fuel supplies (including diesel and heating oil fell last week after rising for two weeks in a row. The 1-million-barrel decrease reflected a spike in demand. Meanwhile, the market looked for a supply gain of 200,000 barrels. Current inventories — at 136.2 million barrels — are 21.9% below the year-ago level and 6% less than the five-year average.

Refinery Rates: Refinery utilization, at 92.6%, was up 1.3% from the prior week.

Wrapping Up

Oil prices settled slightly up on Wednesday, hitting the highest in 32 months. Investors looked past challenges from the Fed’s tightening policy tilt and turned their attention to the improving fundamentals in the energy market.

While oil supplies declined to a four-month low, refinery consumption was at the highest since January last year. Moreover, there was an improvement in gasoline and distillate demand that bodes well for oil prices in the second half of 2021.

The renewed confidence can be gauged from the fact that the Zacks Oil/Energy sector has gained 29.9% so far this year, outperforming the S&P 500 Index’s 13.9% appreciation. In fact, some of the major gainers of the S&P 500 this year include energy-related names like Marathon OilDiamondback EnergyEOG ResourcesHess Corp. and Apache.

Marathon, carrying a Zacks Rank of #3 (Hold), is the top-performing energy stock with a gain of 104.80%, followed by Diamondback (86.71%), EOG (69.86%), Hess (67.68%) and Apache (59.06%).

You can see the complete list of today’s Zacks #1 Rank stocks here.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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