We recently published a list of 8 Best Crude Oil Stocks To Buy Right Now. In this article, we are going to take a look at where Cenovus Energy Inc. (NYSE:CVE) stands against the other best crude oil stocks to buy right now.
On November 6, CNBC reported that following Trump's presidency, the US oil producers are looking forward to fewer regulations on crude production, which could lead to higher oil supply and consequently lower prices. However, Trump's plans to impose more sanctions on Iranian and Venezuelan oil could lead to a tighter global market, potentially boosting prices.
Trump's enthusiasm for increased US oil production was evident in a speech he gave from the Republican campaign in Florida, where he joked about keeping his hands on the "oil, the liquid gold." The US has become the world's largest oil producer, accounting for 22% of the global total, and Trump's policies could lead to even more production.
However, the impact of a Trump presidency on oil prices is ambiguous, according to Goldman Sachs commodities analysts. While increased US production could lead to lower prices, the potential for trade wars and sanctions could dampen global economic growth and slow oil demand. As a result, the longer-term outlook for the market is mixed.
Some experts, such as Amrita Sen, Founder and Director of Research at Energy Aspects, believe that Trump's policies could actually lead to higher oil prices due to the potential loss of Iranian and Venezuelan barrels from the market. Sen notes that Iranian exports could drop by as much as 1 million barrels per day, which could lead to a tighter market and higher prices.
Others, such as Cole Smead, President and CEO of Smead Capital, are more bearish on the outlook for oil prices. Smead believes that lower prices could lead to decreased revenues for American producers, making it difficult for them to make a profit. He notes that the only thing that will cause increased drilling is higher oil prices, which would give producers the margins they need to operate profitably.
In an interview with CNBC on November 29, Samantha Dart, Co-Head of Global Commodities Research at Goldman, discussed the potential impact of tariffs on oil imports from Canada and the Trump administration's plans to increase US oil production.
Dart noted that Goldman's economists are assuming that Canada and Mexico will likely be able to avoid the proposed tariff increase, but it's uncertain and if it were to happen, it could impact the overall balance of the market. She explained that Midwest US refineries rely heavily on Canadian crude oil and do not have many alternative options, which could lead to higher gasoline prices in the US.
About the Trump administration's plan to increase US oil production by 3 million barrels per day. Dart said that the US has been increasing its production to record targets every year and that if the US continues to grow at its current rate, it could potentially reach this target.
Finally, Dart touched on the potential impact of a stronger US dollar on oil prices, noting that a stronger dollar would make oil more expensive in non-dollar economies. However, she noted that when compared to current prices with the level of inventories, oil is currently undervalued, and that the firm expects prices to rise to around $78 per barrel for Brent by June next year, regardless of the impact of a stronger dollar.
Overall, the future of the oil market is uncertain, with both bullish and bearish factors at play. While increased US production could lead to lower prices, the potential for sanctions and trade wars could lead to higher prices.
A fleet of oil tankers at sea, representing the global reach of a crude oil supplier.
Our Methodology
For this article, we sifted through Energy ETFs and online rankings to form an initial list of 25 Crude Oil stocks. We then used Insider Monkey’s Hedge Fund database to rank 8 stocks according to the largest number of hedge fund holders, which was taken from the database of 900 elite hedge funds as of Q3 of 2024. The list is sorted in ascending order of their hedge fund sentiment, as of the third quarter.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Cenovus Energy Inc. (NYSE:CVE) is a leading Canadian energy company involved in the development, production, refining, and marketing of crude oil, natural gas, and refined products. The company operates across five segments: Oil Sands, Conventional, Offshore, Canadian Refining, and US Refining. The company’s key assets include oil sands projects in Alberta, offshore activities in China and the East Coast of Canada, and refining facilities in both Canada and the United States.
On October 31, Cenovus Energy Inc. (NYSE:CVE) announced its financial and operating results for the third quarter. The company generated $2.5 billion in cash from operating activities, $614 million of free funds, and $2 billion of adjusted funds flow in the quarter. The company’s upstream production of over 771,000 barrels of oil equivalent per day (BOE/d) was slightly lower compared with the second quarter, due to the turnaround at the Christina Lake oil sands facility. However, the turnaround impact on production was lower than forecast, as Christina Lake completed its turnaround ahead of schedule. The early completion of maintenance at the Christina Lake oil sands project resulted in production surpassing expectations by 15,000–20,000 barrels/day.
In the downstream, Cenovus Energy Inc. (NYSE:CVE) saw a significant increase in its downstream refining capacity, with total throughput rising by roughly 20,000 barrels per day compared to the previous quarter, reaching nearly 643,000 barrels per day, which was largely attributed to the successful completion of a major maintenance turnaround at the Lima Refinery.
The company’s offshore production remained steady at 66,000 BOE/day, with notable achievements including life-extension work on the SeaRose FPSO and significant progress on the West White Rose project, which is 85% complete and expected to produce the first oil in 2026.
Overall, CVE ranks 8th on our list of best crude oil stocks to buy right now. While we acknowledge the potential of CVE to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
