Oil prices experienced a slight uptick on Friday, yet remain on track to end the year approximately 10% lower. The global standard, Brent crude, saw a 0.4% increase to reach $77.45 per barrel, while the U.S. standard, West Texas Intermediate, rose by the same margin to $72.04. However, both benchmarks have registered a decline of around 10% since the beginning of the year.
Throughout 2023, oil prices have mainly fluctuated within the $80 per barrel range due to factors like restrained global demand and increased U.S. production. Market experts predict that prices will likely remain in this vicinity throughout 2024.
Bank of America analyst Francisco Blanch, in a research note, identified potential upside risks to oil prices, including Middle East tensions, enforcement of U.S. sanctions, and potential Fed rate cuts in 2024. Nevertheless, Blanch noted that significant gains would be limited due to available spare production capacity.
Amidst muted oil prices, energy companies may face challenges in their upcoming earnings reports. Raymond James analyst John Freeman revised his target price for ConocoPhillips stock to $140 from $146. Freeman cited weaker commodity prices as the primary reason for the downgrade. However, he still maintained a Strong Buy rating for ConocoPhillips stock, emphasizing the company’s positive outlook for shareholder returns.
Despite the lackluster performance of the energy sector this year (going from the best-performing sector in the S&P 500 in 2022 to the second-worst in 2023 with a projected year-end decline of 4.6%), some market analysts remain optimistic. Navellier & Associates founder Louis Navellier insisted on the importance of holding energy stocks as a protective hedge for investors, highlighting the sector’s favorable year-over-year comparisons expected in the next three quarters.
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