Oil-related stocks rose Friday, particularly Occidental Petroleum (OXY) - Get Occidental Petroleum Corporation Report, after OPEC and several allied oil producers, including Russia, agreed to boost their output by 500,000 barrels per day in January.
That may seem counterintuitive in that an increase in supply generally means lower oil prices. But in this case, the increase comes amid OPEC expectations of higher oil demand. And the accord came after intense squabbling among the producing nations.
U.S. oil recently traded at an almost nine-month high of $46.08 per barrel, up 0.96%.
Occidental traded at $17.95, up 9.5%.
That ETF includes Chevron (CVX) - Get Chevron Corporation Report, which traded at $92.56, up 3.1%; ExxonMobil (XOM) - Get Exxon Mobil Corporation Report, which traded at $41.33, up 2.8%; and ConocoPhillips (COP) - Get ConocoPhillips Report, which traded at $43.94, up 6.7%.
Many analysts view Chevron as the top U.S. producer. Morningstar analyst Allen Good puts fair value at $111 for the stock.
“Historically, Chevron has benefited from an oil-leveraged portfolio that has led to peer-leading margins and returns on capital,” he wrote in a commentary Monday.
“We expect it to maintain its edge as it moves into the next phase of growth, which is focused on leveraging its large Permian Basin position.”
Further, “although Chevron is an integrated energy company, its narrow economic moat rests on the quality of its upstream portfolio,” Good said.
“Chevron’s upstream segment holds a low-cost position based on an evaluation of its oil- and gas-producing assets, using our exploration and production moat framework.”
And, “its greater exposure to liquids and liquids-linked natural gas production has produced” market-leading returns, he said.