Many other articles on this site have touted the long term benefits of investing in oil and natural gas stocks of all sizes. The performance of major oil firms such as Suncor Energy (NYSE: SU) and ConocoPhillips (NYSE: COP) and small caps such as Octagon 88 (NASDAQ: OCTX) have certainly proven that point. All have done very well in recent market action, with no reason for investors to expect any difference for the future.
Oil, however, has been falling in recent trading.
United States Oil, (NYSE: USO), the exchange traded fund for oil, is down for the last week, month, and quarter of market action. That is due to declining demand around the world as recovery from The Great Recession is still anemic. Warm weather in Europe and the East Coast of the United States has also kept prices down for the short term. Since the demand for heating oil is low, so are the prices.
But that has not been the case with the share prices for Octagon 88, Suncor Energy, and ConocoPhillips.
Since mid-July, Octagon 88 has surged more than 50% (chart below). That is due to very positive reports about its holdings in Canada. The potential of the holdings that Octagon 88 has are huge for a small cap…thus the price jump!
Both Suncor Energy and ConocoPhillips are up sharply for 2013. Much of that has to with Warren Buffett being a major shareholder. When “The Oracle of Omaha” buys a stock, the market reacts with more purchasing. That will naturally drive the stock price up, as has happened with ConocoPhillips and Suncor Energy. For 2013, ConocoPhillips is up more than 30%. Over the last quarter, Suncor Energy has jumped over 10%.
By contrast, ExxonMobil (NYSE: XOM), the world’s largest oil and natural gas firm, is up around 10% 2013.
There is something for everyone in the oil and natural gas sector. According to a recent report by the US Energy Information Administration, global energy demand will increase more than 55% by 2040. That is very bullish news for the shareholders of ConocoPhillips, Suncor Energy, and Octagon 88, who should expect more price rises ahead.