Shares of leading U.S. crude oil producers Exxon Mobil (XOM), Chevron (CVX), and ConocoPhillips (COP) marginally extended their previous day’s losses during Wednesday’s pre-market trading session. This came as President Donald Trump on Tuesday noted that a new round of peace negotiations with Iran could resume this week, sending oil prices lower.
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Crude Oil Prices Drop Below $100
Despite the U.S. military imposing a naval blockade on Iranian ports — thereby halting vessels going in or out from these facilities — oil prices fell for the second day on hopes both countries could find a common ground in the ongoing war. This is even as the two-week ceasefire agreed upon last week is showing signs of collapse ahead of its April 21 expiry date.
As of 4:08 a.m. EST, the global crude oil futures benchmark BZ (CM:BZ) was down 0.25% to $96.51, while the key U.S. oil gauge West Texas Intermediate (CM:CL) fell by 1.27% to $90.96. Earlier in the month, prices topped $110 after Trump threatened to attack Iran’s bridges and power plants if the all-important Strait of Hormuz — through which about 20% of the world’s global oil flows pass — was not reopened.
The first round of talks to end the war hit a wall over disagreements on the strategic waterway, Iran’s enriched uranium stockpile, and frozen assets. Iran’s demand to collect tolls from vessels passing through the strait also irked the U.S.
Wells Fargo Calls for Profit Taking
Oil producers benefit from higher oil prices and have seen their shares jump year-to-date. Of the three U.S. producers, ConocoPhillips (COP) leads the pack with roughly a 28% gain.
However, Wells Fargo analysts Paul Christopher and Michelle Wan have argued that it is time to rotate out of the energy sector. The analysts expect at least some hits to gains, even though they also raised their oil price forecast.
Which Is the Best Oil Stock to Buy?
ConocoPhillips (COP) currently screens as the standout name among major oil producers, according to TipRanks’ Best Oil Stocks tool.
The Texas-based company’s shares offer the strongest potential upside in the group, with its average analyst price target of $137.72 implying about 16% upside. However, analysts continue to consider COP a Moderate Buy.
