Best Oil Stocks to Buy for 2024 and Beyond

Oil stocks followed an outstanding 2022 with a truly dismal 2023. In a year in which the broader market gained more than a fifth, the energy sector actually managed to lose value.

If there's any solace to be found, strategists say the backdrop for 2024 should be much more favorable – and that means Wall Street's best oil stocks to buy are poised for outperformance. 

"While energy stocks have had a slow 2023, I believe 2024 could be bright," writes Maurice FitzMaurice, sector portfolio manager at Fidelity. "Crude oil prices are likely to remain elevated in 2024 – driven by tight supply, increased geopolitical risk, and strengthening global demand for energy. This could set up a positive backdrop for profitability, and potentially stock prices, in the sector."

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To recap the ups and downs for investors in the oil patch, while the S&P 500 went on to deliver a total return (price change plus dividends) of negative 18% in 2022, the S&P 500's energy sector gained 65% on a total return basis.

Cut to today, however, and 2023 has been nothing but pain. The energy sector's total return came to -2% for the year-to-date through mid-December. That lagged the S&P 500 by a whopping 27 percentage points. 

Potential catalysts for oil stocks

Although prices for crude oil fell about 10% in 2023, they appear to have stabilized at a "relatively high" floor, FitzMaurice notes. 

"The price of Brent crude oil started the year at about $77 per barrel, then hit a high of $94 in late September before settling at about $75 as of mid December," writes FitzMaurice. "At these levels, the price of crude oil allows most oil and gas companies to be quite profitable."

Industry consolidation is another potential catalyst for the best oil stocks. The latter part of 2023 saw a frenzy of deal activity, with some of the energy sector's biggest players bulking up in a big way. 

Recall that in December Occidental Petroleum (OXY), one the largest holdings in Warren Buffett's Berkshire Hathaway stock portfolio, bought closely held U.S. shale oil producer CrownRock in a cash-and-stock deal valued at $12 billion including debt. The move came amid a spate of energy sector deals, including Exxon Mobil's (XOM) $60 billion bid for Pioneer Natural Resources (PXD) and Hess's acquisition by Chevron (CVX), a Dow Jones stock, for $53 billion. 

As for the bigger picture, while the risk of a global economic slowdown or even recession remains, the Federal Reserve's pivot to interest rate cuts next year could also help support energy prices. 

Wall Street's best oil stocks to buy

In order to find the best oil stocks to buy now, we started by screening the S&P Composite 1500's oil & gas sector for Wall Street analysts' top-rated names. 

Here's how the ratings process works: S&P Global Market Intelligence surveys analysts' stock ratings and scores them on a five-point scale, where 1.0 equals Strong Buy and 5.0 means Strong Sell. Any score of 2.5 or lower means that analysts, on average, rate the stock a Buy. The closer the score gets to 1.0, the stronger the Buy call. In other words, lower scores are better than higher scores.

We further limited ourselves to stocks with more than 10 Strong Buy recommendations (in order to ensure adequate analyst coverage and sample size). Lastly, we dug into research, fundamental factors, valuation, analysts' estimates and other data on the top names.

Our screen of the Street's best oil stocks served up both familiar names and smaller players in everything from storage and transportation to fracking.

Have a look at the table below to see Wall Street's best oil stocks to buy for 2024 and beyond. 

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