The Best Oil Stocks to Buy 2024

When you want oil stocks to buy, there are several options. You can trade directly, by investing in oil stocks on a commodities exchange. There are numerous commodity exchanges available, and choosing the right one can help an investor make more out of their investment funds.

Oil is one of the most used commodities in the world. Those looking to invest in commodities might consider investing in this product.

In this article, you will learn more about what oil stocks to buy and how to invest in oil.

A List of the Brokers to Buy Oil Stocks in October 2024:

1. Pepperstone
2. eToro
3. AvaTrade
4. Saxo

Description of the Best Brokers to Buy Oil Stocks in October 2024

Pepperstone offers a range of options for trading oil stocks through Contracts for Difference (CFDs). This allows traders to speculate on the price movements of oil stocks without owning the actual shares.

Pepperstone provides access to a variety of oil stocks, allowing traders to go long (buy) or short (sell) on these stocks. This flexibility enables traders to profit from both rising and falling markets.

Trading oil stocks via CFDs also means you can trade with leverage, increasing your market exposure with a smaller initial investment.

Pepperstone supports trading oil stocks on multiple advanced platforms, including MetaTrader 4 (MT4), MetaTrader 5 (MT5), and cTrader. These platforms offer robust charting tools, multiple time frames, and a wide range of technical indicators.

Traders can use these tools to conduct thorough market analysis and execute trades efficiently. The integration with TradingView further enhances these capabilities with powerful charting tools and social trading features.

Pepperstone offers competitive spreads and low commissions on share CFDs, including oil stocks. The trading costs are incorporated within the spread, ensuring transparency and cost-effectiveness.

For example, the Razor account provides lower spreads with a small commission per trade, making it attractive for active traders looking to minimize their transaction costs.

Since its founding in 2007, eToro has been highly regulated by the Financial Conduct Authority (FCA) and many other regulatory bodies worldwide.

With eToro, investors can explore and invest in various oil companies, such as ExxonMobil, Chevron, BP, and Royal Dutch Shell, among others.

The platform provides users valuable insights, real-time data, and analysis tools to help them make informed investment decisions in the oil sector.

Whether users are interested in long-term investments or short-term trading opportunities, eToro offers a user-friendly interface and a vibrant community where investors can share ideas, strategies, and market trends related to oil stocks.

51% of retail investor accounts lose money when trading CFDs with eToro. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Established in 2006, AvaTrade is a leading multinational online brokerage platform that provides traders with a user-friendly interface and robust features.

With AvaTrade, investors can trade oil-related assets from ExxonMobil, Chevron, BP, Royal Dutch Shell and others.

Users have access to comprehensive research tools, real-time market data, and advanced trading features to facilitate informed trading decisions.

With AvaTrade's intuitive interface and user-friendly platform, investors can easily analyze market trends, execute trades, and manage their portfolios.

AvaTrade allows investors to diversify their investment strategies and profit from the fluctuations in the oil market. Additionally, AvaTrade offers a range of educational resources and customer support services to assist traders at every level of experience.

Saxo is an excellent platform for investing in oil stocks due to its comprehensive market access, robust trading tools, and in-depth research capabilities.

Saxo provides access to global markets, allowing traders to invest in a variety of oil stocks from major energy companies around the world. This includes large-cap oil giants listed on major stock exchanges such as NYSE and NASDAQ.

Saxo offers detailed research and analytics, including market insights and company-specific analysis that can be crucial when selecting oil stocks to invest in. The platform provides updates on market trends, financial data, and sector-specific news that are vital for making informed investment decisions in the volatile oil market.

Saxo's trading platforms, such as SaxoTraderGO and SaxoTraderPRO, offer advanced charting tools, technical analysis, and risk management options. These features are essential for tracking the performance of oil stocks and executing trades based on well-informed strategies.

Saxo provides extensive educational resources that help investors understand the complexities of the oil market and how to trade oil stocks effectively. This includes webinars, articles, and video tutorials covering everything from basic trading concepts to more advanced investment strategies.

Investing in oil stocks can be volatile. Saxo’s platforms include several risk management tools, such as stop-loss orders and alerts, which are crucial for managing the inherent risks of the oil market. These tools help protect investments from significant losses, especially in a sector known for its price fluctuations.

What Are Oil Stocks?

Crude oil is a naturally occurring fossil fuel that is obtained by drilling into supplies into the ground. It is then refined to obtain numerous products such as petroleum, gasoline and diesel fuel.

These are used to provide energy in a variety of ways. It also provides consumers/industry with several other products like lubricants and asphalt.

The top producer in the world is the US. They produce about 18.60 million barrels a day, then Saudi Arabia produces the next most, Russia and then Canada.

In the world, 94.2 million barrels are produced a day, though the amount that is produced can vary, depending on what certain countries commit to purchasing. For instance, the OPEC and its allies announced in April that they were going to cut the production of oil to just 3.66 million barrels per day.

For usage, the US has the most, and requires importation to meet demands, despite being the largest producer in the world.

Fossil fuels account for 60% of the world's energy production, with oil accounting for more than half of the fossil fuels used and more than 33% of the planet’s total energy production.

Despite this, the use of crude oil has dropped significantly by 9.1 million barrels per day. It still remains one of the most valuable assets, and the value of a barrel is constantly watched.

The price of a barrel can vary widely from one day to the next. When a group of oil-producing companies say they’re going to reduce the amount of oil produced, this often means that the price of the barrel of oil will increase. When demand reduces, prices can go down.

All price changes of the barrel of oil are tracked in indices such as the Brent Crude Index and the West Texas Intermediate (WTI).

All prices are measured in barrels. Barrels are the equivalent of 36 gallons of crude oil.

What Oil Stocks Can I Invest In?

Here are some well-known oil companies that have historically been prominent players in the industry.

Please note that past performance is not indicative of future results, and the value of stocks can fluctuate based on market conditions and various other factors.

Some major oil companies that investors have traditionally considered include:

1. ExxonMobil Corporation (XOM)

ExxonMobil is one of the world's largest publicly traded energy companies. It operates in various segments, including exploration, production, refining and marketing of oil and natural gas. The company has a global presence and is known for its extensive upstream and downstream operations.

2. Chevron Corporation (CVX)

Chevron is a multinational energy corporation engaged in oil and gas exploration, production, refining and marketing. The company has significant assets worldwide and is involved in various major oil and gas projects.

3. Royal Dutch Shell PLC (RDS.A, RDS.B)

Royal Dutch Shell, commonly known as Shell, is a global energy company involved in the exploration, production, refining, and marketing of oil and natural gas. It has two classes of shares, RDS.A and RDS.B, traded on different stock exchanges.

4. BP PLC (BP)

BP is another major international oil and gas company with a diversified portfolio of operations. It engages in upstream exploration and production, downstream refining and marketing, and alternative energy projects.

5. TotalEnergies SE (TOT)

TotalEnergies is a French multinational energy company operating across the entire energy value chain. It has a strong presence in oil and gas, as well as investments in renewable energy sources like solar and wind power.

6. ConocoPhillips (COP)

ConocoPhillips is an independent exploration and production company with significant oil and gas assets worldwide. It focuses on upstream operations and has exposure to conventional and unconventional resources.

7. Occidental Petroleum Corporation (OXY)

Occidental Petroleum is involved in oil and gas exploration and production, with operations in the United States and internationally. The company also has interests in petrochemicals and other energy-related businesses.

8. EOG Resources, Inc. (EOG)

EOG Resources is an American oil and gas exploration company with a primary focus on unconventional resources, particularly shale formations. It is known for its innovative and efficient drilling techniques.

9. Schlumberger Limited (SLB)

Schlumberger is one of the world's leading oilfield services companies. It provides technology, equipment, and expertise to support oil and gas exploration and production activities for various energy companies.

10. Phillips 66 (PSX)

Phillips 66 is an energy company involved in refining, marketing, and midstream operations. It operates refineries and sells refined products, including gasoline, diesel, and aviation fuels.

It's essential to note that the performance and outlook of these companies can be influenced by various factors, including oil prices, global energy demand, geopolitical events and industry-specific developments.

As with any investment, it's crucial to conduct thorough research, understand the companies' financial health and prospects, and consider your own investment goals and risk tolerance before making any decisions.

Understanding the Oil Industry

When learning how to invest in oil, you need to know more about the industry, so you can be prepared. It also helps to understand the fundamentals, so you can analyse news stories or media reports and how they will impact your investments.

Investments are always risky, and investing without prior knowledge of the industry is extremely risky. So spend some time before you look to buy oil stocks, researching more about the process, brands and history of the commodity.

The industry is set into three segments. These are known as:

• Upstream
• Midstream
• Downstream

Each of these elements plays an important part in the market ecosystem.

Upstream

The very early part of the oil and gas industry. It is where exploration is carried out to find new underground or underwater supplies that can be drilled. Drilling and the initial production processes are also included in the upstream stage.

When companies are looking at new sources of oil, they’re looking at density and sulphur properties. Density is measured by API gravity, which can range from light (high APO gravity or low density) to heavy (low API gravity/high density).

Sulphur content is measured from sweet (low sulphur content) to a rating of sour (high sulphur content).

The highest-value crude oil is light and sweet. It is easier to refine, and therefore, the profits for the oil companies can be much higher.

Midstream

This part of the process is about the transportation, storage and wholesale marketing of crude oil or refined petroleum products.

Pipelines, transport vehicles or other transport methods are used to move crude oil from production sites to refineries; they can also be used to deliver refined products to distributors within the network.

The midstream operations will normally include some elements of both the upstream and downstream sectors. For example, some of those who are involved in the upstream process may also be involved in the transportation.

Or a company might be involved in the refining process and then move the product to the sellers.

Downstream

These are the operations a company uses to take the crude oil, refine it and sell it. There are numerous brands that the average consumer will recognise in this section, and they’re often the larger public face.

All Three Segments

While there are companies that have specialisms, such as exploration or drilling, most of the brands have different divisions for the three elements within the oil production. This can reduce costs because they don’t have to pay additional fees along the production line.

What Moves Crude Oil Prices?

Like other commodities that you can purchase, like gold and silver, the crude oil stock price can change quickly over time. When ODEC announced that they were cutting their production, the price of a barrel of oil increased by $5.

The price of crude oil can therefore increase or decrease based on the level of supply and demand of the commodity. When you’re looking at investing in oil, then you need to pay careful attention to the price of the barrel.

The typical behaviours can be predicted. When there is too much supply, the oil stock investors will often sell their crude oil investments on the market. As a result, the price of the barrel will drop.

However, if there is a sudden surge in demand for oil, and there is a limited design, then traders will often purchase more crude oil and the price will increase.

Other factors can also play an important part in the price of oil. World events, political decisions and even rumours or speculation can affect the price of a barrel of oil.

For example, after the start of the Russian-Ukraine war in February 2022, the price of oil soared to more than $105 per barrel. Since then, the value has dropped, with the latest price being $71.29 per barrel.

What Are the Investing in Oil Options?

For those who are looking to buy oil stocks, there are numerous options to market. Here are some of the options that you can choose from. These can be broken down into direct and indirect investment opportunities.

Direct Investing in Oil

There are numerous options to directly invest in crude oil, rather than just buying stock and relying upon the oil stock price rising because the company has performed well. Direct investment can reduce some risks but also increases some of the other risks.

Derivatives Markets

The vast majority of oil trading occurs in a derivatives market. Different types of investments can be made that include:

Oil Futures Contracts

An agreement where the investor will commit to buying or selling a set amount of barrels of oil. The price and date of the transaction will be set in advance, and so the investment will expire on the specified date unless an option to roll over the futures contract is enabled.

To make a profit on this type of investment, the price of the oil must be higher at the end of the contract than it was at the beginning of the contract. Because there are limited controls, there is the possibility of significant losses in this investment.

Oil Drilling and Service Companies

Some investors will instead choose to invest in the upstream portion of the oil production process. They will invest in stocks/shares of oil drilling or exploration companies. The money they invest is put into use for paying for expeditions to find new sources of oil.

When the drilling or exploration company has secured new oil sources, their share prices usually increase. Therefore, the investor can sell their shares to earn a profit on the investment. The problem is that sometimes, exploration fails and this can lead to a loss of potential value within the stocks.

Exchange-Traded Funds

This is the closest that an investor can get to buying and selling shares as if oil was a company. Oil ETFs are traded on the stock market. An oil investor makes a profit by buying shares in oil when the price of oil is at a low and selling them when they are at a high.

It can sometimes be the safest option for investing, as there is more control over investment. But it still relies on the price, which can be influenced by third-party elements.

Indirect Investment Options

There are also other ways that individuals can invest in oil; these are more indirect and can therefore mean that other commodities are included in the investment.

Energy Sector ETFs

These funds include different elements of the energy sector. So while you might want to specifically invest in oil, you might be investing in other energy sources like natural gas, renewable energy, etc.

There are some advantages to investing in EFTs. If there is news that some aspects of the oil industry are in trouble and the price goes down, other elements of the energy industry might increase.

Mutual and Index Funds

In this case, investors opt for mutual funds that are invested in numerous energy-related stocks, such as those within oil companies. There is a chance that none of the funds deposited into this investment are invested in oil stock.

However, there are reduced risks, as it diversifies a portfolio.

Smart Portfolios

There are numerous options for investing in smart portfolios. Investing in these can be managed by a broker or professional trader.

Advantages vs Drawbacks of Investing in Oil

To ensure that you understand the risks of investing in oil, it is important to understand the advantages and disadvantages of investing in oil. Here are both arguments.

Advantages of Investing in Top Oil Stocks

There are some classic advantages of investing in the top oil stocks.

For one, it is suitable for both short-term and long-term investors. Oil prices can change very quickly, with one small event causing a significant change in the price of a barrel of oil.

Likewise, the price of oil generally will increase over time. In February 1948, the price of crude oil was about $30 per barrel. Today it is worth more than twice that. There have been a couple of dips since then, but these are usually very short-term, allowing for a profit after some time.

Another advantage of investing in crude oil stocks is that the market is highly liquid. This means that there are quick changes, offering opportunities for quick trades that have many significant gains in general.

And there are possibilities of getting dividends when you are investing in oil company stocks.

Disadvantages of Investing in Top Oil Stocks

The market can be highly volatile, so while there are profit opportunities, there are also significant chances that a loss can be made. Those who invested after the Russian invasion of Ukraine will have seen their investments reduced by more than 20%, for example.

There are also legal and regulatory risks that have to be taken into account. And if there is a major incident, such as an oil tanker sinking or environmental damage caused by one of the top oil companies, then you will notice that the value of oil will drop significantly.

How to Buy Crude Oil Stock

There are numerous ways that you can buy crude oil stock or invest in a crude oil company. One option is to open an investing account or trade broker account. Not all brokers or investment platforms will trade in commodities, so choose a platform that will offer this service.

You also want to make sure that you are choosing a platform that has numerous features. So when you’re thinking about how to buy crude oil stock, you might want to consider one that has a beginner’s support section, practice account or perhaps analysis tables.

Choose carefully and read reviews before opening an account.

When you’ve opened an account, you’re going to have to deposit funds. Most trader accounts require a minimum deposit. Some do not. You can often pay through numerous ways.

Once funds have been deposited, you can search for the option to invest in oil and make your purchase.

Frequently Asked Questions

Final Thoughts

Buying oil stocks can be very rewarding and profitable. With timely buying and selling strategies, investors can make good returns on their initial investments.

However, there is always a risk when investing, and you should only invest in what you can afford to lose.