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Oil Stocks Rise as Middle East Tensions Lift Crude Ahead of Earnings Season, RBC Says

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Shares of US oil and gas producers gained over the past week as renewed tensions between Israel and Iran pushed crude prices higher ahead of the Q2 earnings season, RBC Capital Markets analyst Scott Hanold said in a Thursday note.

Oil prices climbed to around $80 per barrel for the US benchmark West Texas Intermediate after US President Donald Trump pledged further action against Iran following renewed military strikes.

The renewed geopolitical tensions came as the US Strategic Petroleum Reserve fell for the consecutive week to 316.5 million barrels, while inventories at the Cushing, Oklahoma, delivery hub rose above the 20-million-barrel level considered the minimum for efficient operations.

Despite the jump in oil prices, trading activity across energy markets remained subdued, Hanold said.

Oil-focused exploration and production companies outperformed their natural gas peers over the past week. Shares of oil-weighted producers rose about 3%, while gas-focused companies slipped 1%.

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) gained 4% as crude prices rose about 10%, while US natural gas benchmark Henry Hub prices fell 4%.

Investor attention is now shifting toward the upcoming US exploration and production earnings season, with analysts reporting increased discussions around company strategy and capital allocation after limited interest from generalist investors during much of the second quarter.

Among the companies drawing the most attention are Expand Energy (EXE), where investors are awaiting the appointment of a new chief executive and Devon Energy (DVN) over potential asset sales.

Other companies include EOG Resources' (EOG) exploration activities in the UAE, Matador Resources' (MTDR) efforts to unlock value from its midstream assets, California Resources' (CRC) strategic initiatives, and EQT's (EQT) growth plans.

Analysts said investors are also focused on the potential for mergers and acquisitions, free cash flow allocation and the outlook for US natural gas markets, with EOG, Matador, SM Energy (SM) and EQT emerging as favored names heading into earnings.

Price: $168.11, Change: $+1.67, Percent Change: +1.00%

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