3 Oil and Gas Stocks to Watch This Week

OPEC not budging on increasing production despite pressure from tweets

With oil prices bouncing back nearly 25% in the first quarter of 2019 due to production cuts from the Organization of the Petroleum Exporting Countries (OPEC), it's not surprising to see the share price of leading independent oil and gas companies also make a rebound.

Despite President Trump's March 28 tweet pressuring OPEC to increase supply for the purpose of protecting fragile global markets, the group, which consists of 14 of the world's major oil-exporting nations, appears unperturbed by the president's latest social media demands. The producing countries next meet in mid-April to review the production cuts, which are scheduled to last through the first six months of 2019.

When questioned about one of Trump's earlier tweets this year persuading OPEC to relax production cuts, Saudi Energy Minister Khalid al-Falih told CNBC that the group was already taking a relaxed stance. The Saudi official said that he's leaning toward extending the six-month production cuts into the second half of 2019 but will review the oil market's fundamentals.

As the friction grows between Washington and OPEC continues, traders should keep a close eye on these three oil and gas issues for possible breakout plays ahead of the production meeting later this month and the weekly crude oil inventories report released by the Energy Information Administration (EIA) Wednesday at 10:30 a.m. EDT.

Occidental Petroleum Corporation (OXY)

Occidental Petroleum Corporation (OXY) engages in the exploration and production of oil and gas properties with operations in the United States, Latin America and the Middle East. The Houston-based company was among the top three exporters of U.S. crude oil in 2018 and plans to double crude exports to 600,000 barrels per day by 2020. Occidental trades at a respectable 12.3 times earnings, lower than the industry average multiple of 17.7. As of April 1, 2019, the stock has a market capitalization of $49.62 billion, offers an attractive 4.69% dividend yield and is up 9.12% year to date (YTD).

Since recouping roughly half of December's losses in January, Occidental's share price has traded within a tight six-point range. The relative strength index (RSI) sits just above 50.0, giving a neutral reading. Look to buy the stock on a break above the range's top trendline at $68, provided that above-average volume accompanies the move. Consider booking profits at $74 – an area where the price may encounter resistance from the September swing low and November swing high. Keep a tight stop just below the 50-day simple moving average (SMA) to protect against a head-fake breakout.

Chart depicting the share price of Occidental Petroleum Corporation (OXY)

EOG Resources, Inc. (EOG)

S&P 500 component EOG Resources, Inc. (EOG) explores for, develops and produces crude oil and natural gas. The energy exploration company has net reserves of 2.9 billion barrels of oil equivalent and averages net production of over 700,000 barrels per day. EOG Resources posted a 36.9% year-over-year (YoY) revenue increase in the fourth quarter, crediting higher production numbers as well as increased oil and gas price realizations. The Street's average price target on the stock is $119.78 – a 26% premium to Friday's $95.18 closing price. EOG stock, with a market value of $55.21 billion and 84.08% institutional ownership, has gained 9.39% so far this year as of April 1, 2019. Investors also receive a 0.92% dividend.

EOG's share price had a volatile March, dropping by about 10% before recouping the losses later in the month. Although the stock trades above a downtrend line dating back to early October, it sits below a trendline extending back to November. Consider buying the stock if the price closes above this significant resistance area. Think about setting a take-profit order at the $114 level, where the price may find headwinds from the lower trendline of a previous trading range. Manage risk by positioning a stop under the March 25 low at $91.98.

Chart depicting the share price of EOG Resources, Inc. (EOG)

EQT Corporation (EQT)

With a market cap of $5.28 billion, EQT Corporation (EQT) operates as a natural gas production company in the United States through two subsidiaries: EQT Production and EQT Midstream. In January, the company implemented a cost reduction plan titled "Target 10% Initiative," which aims to reduce cash costs by 10% and deliver cost savings of $800 million over the next five years. EQT expects first quarter 2019 sales volumes to come in at the high end of the guidance range of 360 to 380 billion cubic feet equivalent (BCFE). The company's stock yields 0.58% and has returned 9.95% YTD as of April 1, 2019, making it the top performer of the three issues discussed.

EQT shares have traded in a sideways trend for the majority of the first quarter, with the price currently testing the upper trendline of this year's trading range. The RSI sits below overbought territory, indicating that the stock has plenty of room for further upside. If a breakout occurs at the $21 level, look for a run up to $24, where the price may find resistance from the October swing low. To help manage risk, move stops to the breakeven point if the stock reaches the 200-day SMA. Consider placing a stop-loss order just below $21 to cut losing positions.

Chart depicting the share price of EQT Corporation (EQT)
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