As crude prices rise, oil stocks should be your next bets

Nigeria’s stock investors should consider increasing their equity stake in Oil & Gas stocks as cheering news from the crude oil market foretells improved earnings particularly for the key players in the exploration and production as well as products distribution.

Oil prices steadied after an early jump on Wednesday as industry data show a bigger-than-expected drop in U.S. crude inventories, though rising global Covid-19 cases capped price gains.

Brent crude prices were up 15 cents at $56.73 a barrel. Prices rose to a session high of $57.42 a barrel earlier in the session, the highest since February 24. Market watchers said the next milestone for Brent prices is a rise above $60, a level not seen since late January 2020.

Commerzbank said the optimistic mood among investors, coupled with positive signs on the crude oil supply and demand sides, is lending support. U.S. West Texas Intermediate (WTI) was up 20 cents at $53.41, after hitting a session high of $53.93.

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At the Nigerian Stock Exchange (NSE), the market moved further into the green zone on Wednesday, confirming some analysts’ bullish views.

The market’s benchmark performance indicator –the NSE All Share Index (ASI) increased by 0.11percent to 40,341.05 points from 40,295.95 points recorded the preceding trading day, while the value of listed stocks increased by N24billion to N21.093trillion, from preceding day low of N21.069trillion.

This week, the market has risen by 0.55 percent, pushing the year-to-date (ytd) return higher at +0.17percent. The shares of Mobil Oil Nigeria Plc led the advancers list on Wednesday January 13 after the price moved up by N21.5 or 9.43percent, from N228 to N249.5.

Earlier this week, Lagos-based United Capital research analysts said they expect to see a sustained bullish bias in the market, “particularly in the Oil sector, as Oil stocks remain considerably undervalued”. Though, the analysts anticipated some profit-taking on stocks which rallied considerably during the late December trading sessions.

Also, Flour Mills Nigeria Plc share price increased from N27.4 to N29.3, after adding N1.9 or 6.93percent. Also, BOC Gases Nigeria Plc rallied from a low of N11.39 to N12.52, adding N1.13 or 9.92percent; Seplat Petroleum Development Company Plc rose from day-open low of N496.1 to N496.5, adding 40kobo or 0.08percent; while Ardova Plc moved from N19.7 to N20, adding 30kobo or 1.52percent.

Zenith Bank Plc, LASACO Plc, UBA Plc, Japaul Gold, and Sovereign Trust Insurance were most traded stocks on the Nigerian Stock Exchange. Investors in 5,697 deals exchanged 468,146,022 shares valued at N6.96billion.