On Thursday, Brent crude oil topped $80 a barrel for the first time since November 2014 as the market grows concerned regarding the Trump administration's efforts to sanction Iran's crude exports. West Texas Intermediate (WTI) crude hit a 3.5-year-high at $72.30 on Thursday, up over 15% in three months. Oil prices have been steadily on the rise over the past few years due to myriad of factors including an economic collapse in Venezuela and supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and Russia. (See also: Top 3 Small-Cap Oil Stocks for 2018.)
A recent story from CNBC looked at data from the hedge fund analytics tool Kensho to pinpoint some of the market's best performers in periods when oil prices have increased significantly. In the time from May 2008 to now, there have been 16 times when oil prices have gained more than 10% over the course of three months. Across those cases, WTI was up about 15% on average.
In Similar Environments, These Stocks Have Gained
Over the past decade, there have been a handful of energy stocks that have outperformed in periods of rising crude prices similar to the current environment. They include Andeavor (ANDV), which has gained an average of 17.1% in the three-month period where oil prices rise over 10%, as well as Concho Resources Inc. (CXO), which has posted an average return of 16.2%, and Philips 66 (PSX), securing an average 15.1% increase over the 16 similar oil prices environments. Andeavor, which operates refineries and oil infrastructure in the western U.S., traded positive 75% of the time, according to Kensho, while Concho traded positive 94% of the time and Philips 66 traded positive at a 90% rate.
On Thursday, analysts at Morgan Stanley highlighted new international shipping regulations as another factor set to drive crude prices up as a change in pollution rules shifts demand to middle distillate products like diesel and marine gas oil, expected to trigger a need for more crude. The analysts foresee demand far outpacing production, forecasting Brent crude, the international benchmark, to reach $90 by 2020. (See also: Oil to Hit $90 a Barrel: Morgan Stanley.)