Crude oil prices are moving in the opposite direction of energy stocks over the last three months amid unique economic pressures
not seen in more than four decades. Many observers expect the Fed’s policy moves to send the U.S. economy into a recession. Aerial view of Phillips 66 oil refinery is seen in Linden, N.J., May 11, 2022.Adam Anderson, CEO at Innovex Downhole Solutions in Houston, Tex. told FOX Business on Wednesday, "Numerous refineries are coming online in 2023 and should lower the spread between crude and refined product, while buffering demand destruction due to high gasoline and diesel prices.
"It’s probably a buy the rumor sell the news kind of situation," he continued. "Energy equities are holding in the face of oil weakness because investors are pleasantly surprised by the earnings, cash flows, and capital discipline coming out of the sector." "Despite trading at much lower multiples relative to the S&P, we’re starting to see capital discipline lead to better returns across the sector and room to rerate higher in 2023," Anderson added. Oil prices rose slightly on Tuesday after the previous day's rally, supported by expectations of a tighter market as output talks of OPEC+ nations were called off, but concerns that members may start to increase production capped gains.
"On top of this, we’ve had some of the most compliant OPEC+ policy in decades as global supply tightens," he continued. "Therefore, investors are viewing American oil as an opportunity, and they don’t need $100-plus crude to maintain high margins." "Supply is limited largely due to political factors, but there are still hopes of resilience in the longer-term demand curve," Kobeissi finished.
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