The worldwide oil industry took a big hit in 2020. The COVID-19 pandemic led to a global recession, something never seen so far. As such, the oil demand literally collapsed and it was the cause of one of the most spectacular charts in the financial world in 2020 – the price of oil went negative.
After the crude oil price futures contracts settled below zero in April 2020, the world's top producers got together and cut the supply. However, it was clear to everyone that we will not see a V-shaped economic recovery but a gradual one.
Fast-forward one year and the oil industry shows signs of life. The price of oil is back into positive territory and rising, trading close to $60 at the time this article is written. As such, we present below the best oil shares to buy in 2021.
Overview of the Oil Companies
The oil companies that made our top ten list of oil companies to buy in 2021 have a strong financial position despite the decline in the demand mentioned earlier. Another thing to consider is that increased efforts from governments and institutions to push toward green reforms due to climate change.
However, oil is still the biggest component of the energy mix and most of the companies presented here are dividend-paying companies and run major campaigns to invest in a greener future.
What Are the Trading Hours for Oil Shares?
Most of these companies are listed on the major stock exchanges in the United States. Therefore, the regular trading hours are the best time to buy oil shares.
Where Can I Buy Oil Shares?
Trading in common shares and CFDs goes through brokers. Against a small fee for their services, the broker intermediates the transaction between the trader and other market participants. We've shortlisted the best oil stocks to buy in 2021 and you can start trading them in our recommended brokers by clicking on the buttons of the following table.
Top 10 Oil Shares to Buy
The following list presents the best oil shares to buy in 2021 based on their financial strength and future growth perspectives:
- Exxon Mobil Corporation
- EOG Resources
- Royal Dutch Shell
- Occidental Petroleum
Exxon Mobil Corporation
A Texas-based corporation from the United States, Exxonmobil has recently made headlines as it was dropped from the S&P 500 index to make room for Tesla. The company runs a worldwide business in the integrated oil and gas industry, while the energy sector has been severely affected in the last years by both the pandemic and the green efforts by public institutions and governments. It has proved reserves of over $22 billion oil-equivalent barrels and employs over 70k people.
- Market capitalization: $220.54 billion
- Helped by the recent rally in the crude and Brent oil prices
- Listed on the New York Stock Exchange under the ticker XOM
- Down 15% year-to-date
- Dividend-paying company
- Formed a potential double-bottom, a reversal pattern at $35
A Norwegian company from Stavanger, Equinor is involved in everything oil-related. It transports, refines, and markets petroleum-derived products all over the world. Also, it is involved in drilling, exploration and transportation of oil and gas all over the world, employing over 21k people since 1972.
- Market capitalization: $60.31 billion
- Recently took a huge write-down (close to $1 billion) on a Tanzanian LNG project.
- Listed on the New York Stock Exchange under the ticker EQNR
- Up 6.89% this year alone
- Up 32% in the last five years
- Recently exited the Canadian oil sands business
From Houston, Texas, EOG Resources employs close to 3k people and is an active player in the oil and gas exploration and production industry. The challenges in the energy sector did affect the company, yet it continues to deliver solid gross profit margins.
- Market capitalization: $34.66 billion
- The recent rally in the prices of oil helped all energy companies
- Listed on the New York Stock Exchange under the ticker EOG
- Down 20% in the last fifty-two weeks
Royal Dutch Shell
Headquartered in The Hague, the Netherlands, Royal Dutch Shell operates worldwide and is one of the most active players in the integrated oil and gas industry. It markets and trades carbon-emission rights, crude oil, electricity, and so on. It runs a huge business, employing over 80k people all over the world.
- Market capitalization: $143.99 billion
- A dividend payout company for the last 15 years
- It recently declared a dividend of $0.333/common share
- A-class shares listed on the New York Stock Exchange under the ticker RDS.A
- Down 13% in the past five years but doubling in price since the 2020 meltdown
A Chinese company from Shanghai, Sinopec’s main business activity is in the commodity chemicals industry, the materials sector. However, it also sells petrochemical and petroleum products, as well as produces various fuels, such as liquified petroleum gas or jet fuel and heavy oil.
- Market capitalization: $4.86 billion
- Listed on the New York Stock Exchange under the ticker SHI
- Up 13.8% year-to-date
- Down 30% in the last five years
Schlumberger is a large American corporation that provides services to the oil and gas industry worldwide. It employs over 80k people and is involved in the oil and gas equipment and services industry. Its vast array of services comprises well services, well completion, artificial lift production, production management services, and so on – all in the oil industry.
- Market capitalization: $36.19 billion
- Listed on the New York Stock Exchange under the ticker SLB
- Down 24% in the last year
- Up 20% year-to-date
From Huston, Texas, United States, ConocoPhilips is a company that produces, markets and transports oil, natural gas, bitumen, and other oil-related products. It does so worldwide, being a player active in the oil and gas exploration and production industry.
- Market capitalization: $63.25 billion
- It recently reported earnings for Q4 2020 and the expected loss was tighter than expected
- The recent rally in the oil prices bodes well for the future growth perspectives
- Listed on the New York Stock Exchange under the ticker COP
- Dividend paying company with a payout ratio that exceeds 100%
- The share price is up 35% in the last five years
- The share price is up 17% year-to-date
Still from Houston, Texas, the United States, Occidental Petroleum is a direct competitor of ConocoPhillips and is an active player in the integrated oil and gas industry. It employs over 14k people and it had recently suffered from the fall in the demand of oil caused by the COVID-19 pandemic.
- Market capitalization: $23.7 billion
- Listed on the New York Stock Exchange under the ticker OXY
- Down over 60% in the last five years
- Up 47% in 2021 so far
Halliburton is active as well in the oil and gas equipment and services industry and its share price had a similar path to the one of Occidental Petroleum.
- Market capitalization: $17.81 billion
- The gross profit margin for the last twelve months above 7% despite lower oil prices
- Listed on the New York Stock Exchange under the ticker HAL
- Down 35% in the last five years
- Up 6% in 2021
Another American giant from the integrated oil and gas industry, Chevron employs over 48k people and was founded in 1879. It changed its name in 2005 but not its luck as its share price went nowhere in the recent years.
- Market capitalization: $176.13 billion
- Recently announced its intention to acquire Noble Midstream Partners LP
- Listed on the New York Stock Exchange under the ticker CVX
- Up 6.38% in the last five years
- Up 8.32% year-to-date
Expert Tip On Investing in Oil Shares
Oil shares correlate with the price of oil, so if the price of oil is in a rising trend, that will be reflected in the oil companies’ earnings in the period ahead.
Why Invest in Oil Shares?
Oil still represents the biggest component in the energy mix. As the world’s economy gradually recovers from the pandemic, oil demand will likely pick up and the pressure on the price of oil will rise. Hence, a positive for the industry. Moreover, most oil companies presented here pay dividends.
Frequently Asked Questions
That would be Royal Dutch Shell. With over 80k employees all over the world and one of the largest market capitalizations in the industry, it survived for decades in an increasingly challenging environment.
The price of oil bounced from negative territory in 2020 (i.e., the futures contract on the WTI crude oil price settled close to -$40 in April 2020) to $60 recently. The higher the oil price, the better for the oil companies.
Chevron. A solid balance sheet with a diversified business model and access to cash and cash equivalents.
Investors looking for a constant dividend and who believe that the pandemic will be over sooner rather than later and that would trigger higher oil prices due to increasing demand.
Schlumberger. It doubled in price since April 2020 and it recently announced that it tapped Lambert to lead in a hydrogen production venture.
The pandemic hit the oil industry hard. However, it was already in decline as green efforts from governments and institutions as well as pressure from the population to act against climate change affected the business model too. Yet, fossil fuels account for the largest share in the energy complex demand, so oil is here to stay for quite some time still.