It has been a rough patch for Big Oil stocks such as BP PLC (NYSE: BP), Chevron (NYSE: CVX), and ExxonMobil (NYSE: XOM), in recent market action.
ExxonMobil, the world’s largest oil and natural gas company, is off for the last quarter and six months of trading (chart below).
That is the same for BP PLC, Chevron, and other Big Oil companies. Slumping global economic growth has lessened demand. Compounding the falling demand is the increasing production from North America, especially the United States. Less demand and more supply will always result in falling prices for a good or service.
This is especially true for commodities like oil and natural gas!
But strong reports from Caterpillar (NYSE: CAT) and 3M (NYSE: MMM) have changed the view on global growth. It is now looking more bullish. This results from 3M and Caterpillar deriving much revenue from international sales. As a result, Chevron, BP, ExxonMobil, and other oil stocks have rallied. The question is now should investors return to Big Oil stocks like Chevron?
Long term investors should never had sold shares of Big Oil stocks like BP PLC and others!
It is impossible to time the stock market. Investors are better off buying stocks and being loyal. That is particularly so for Big Oil Stocks for a variety of factors.
The most important is demand for oil and natural gas.
Every major report projects that it will increase in the future. There is no substitute. Coal is too dirty. Alternative energy can not gear up on the scale needed for mass market usage. The need for oil and gas will rise in the decades ahead.
Big Oil stocks also pay long term investors to be patient.
Companies such as BP PLC, Chevron, ExxonMobil, and other Big Oil entities are ideal for income investors. All pay above average dividends. Each has a history of increasing their dividend. From that, a robust total return should await long term investors in Big Oil stocks even with the decline in the short term.