Most of the best-performing stocks of 2022 up to this point are highly exposed to the red-hot energy market. Russia's invasion of Ukraine has sent oil, natural gas, coal and other commodity prices soaring, creating an earnings tail wind for many energy sector stocks. Stocks that are highly correlated to oil prices have generally been great investments so far this year. However, high correlation to crude can be a double-edged sword, as many energy investors experienced when crude prices collapsed in early 2020. Here are the seven Bank of America buy-rated stocks with the highest correlation to WTI crude oil prices. APA Corp. (APA) Baker Hughes Co. (BKR) Chevron Corp. (CVX) Eastman Chemical Co. (EMN) Exxon Mobil Corp. (XOM) Fortune Brands Home & Security Inc. (FBHS) Halliburton Co. (HAL)
The way I see it, oil prices are still headed higher. I hear Joe Biden is going to release massive amounts of oil from the strategic reserve. That bandaid solution will be short lived. The war on US oil companies continues. None of these US oil companies have an incentive to produce more, at the same time tighter regulations and possibly higher taxes are being imposed on them. Saudi Arabia, Russia and OPEC just got another gift of higher oil prices.
The best time to buy oil equities was when oil prices went negative. I just regret I didn't have even more $ at the time to grab further fire-sale prices. And thank you Biden for being a stand-up guy and killing the Keystone progress on your first day in office. My shares are enjoying this by watching Americans suffer for both YOUR decisions and that of YOUR voters... I've shorted some more PUTs on some good oilsands, but for now there is no need for me to purchase even more shares in that sector.