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Market Wrap-up for Apr. 15 - Oil Claws its Way Higher

The drop in crude oil prices has been one of the biggest stories on Wall Street over the trailing year. Analysts have called for bottoms at multiple levels, but it seems that crude may have finally stabilized as it slowly claws its way higher.

A Good Month for Crude

Many investors have their eyes fixated on the Fed or earnings season, leaving oil’s small recovery somewhat under the radar. Over the trailing month, oil prices have risen more than 13% as crude seems to have comfortably landed above the $50/barrel level. Relief has come in part from the cooling of the U.S. dollar, but it’s also likely that crude was oversold in the first place as volume on oil related instruments had surged in the early part of 2015.

Just this morning, the International Energy Agency noted that U.S. stockpiles rose less than expected, sending prices higher. The IEA also noted that oil demand is beginning to pick up, another factor aiding the lift in crude. Oil’s movements impact the market in a handful of different ways, but dividend investors are likely most concerned with the movements in the energy giants.

Energy Stocks Move Higher

Energy bellwethers are often sought after for their stable yields and commitment to growing payouts on an annual basis. But these stocks have been lackluster for the better part of the last year as crude’s drop worried many that profit margins would be squeezed too thin. Here’s a look at three of the performance of three of the most popular energy stocks over the trailing month:

  • Exxon Mobil (XOM ): +4.8%
  • Chevron (CVX ): +8.7%
  • ConocoPhillips (COP ): +12%

For one month, those numbers are very impressive. But when you consider the ground those stocks (as well as a large portion of the energy industry) lost in the months prior, it is still not enough. Investors will hope to see their favorite energy giants recover further in the coming weeks and months; that effort will start with earnings season.

Investors are beyond anxious to see how these companies have handled a quarter of low and often-volatile crude oil prices. Pay attention to not only the numbers, but also the CEO commentary on how the company is mitigating the current oil environment and its outlook for profitability if prices remain depressed.

The Bottom Line

In its recent fall from grace, crude has shown a few flashes of recovery, only to lose ground shortly thereafter. This move higher seems a bit more convincing than those past, but there is still no guarantee oil can continue to rise or even hold at current levels. Oil will remain under the microscope in 2015 and especially so for energy investors.

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