Why Chevron and ExxonMobil Stocks Stand Out News ad

Multiple factors, including forecasts for an extremely cold winter and rising natural gas prices, are pushing diesel prices higher. The Department of Energy/Energy Information Administration (DOE/EIA) reported an increase in the average retail price of diesel fuel by $0.027, reaching $3.503 per gallon by the end of 2024. The jump coincides with gains in ultra-low sulfur diesel (ULSD) futures. the price rose $0.055 per gallon to $2.2995, up 2.44% and the highest since November 5th.

Natural gas prices have also risen sharply, with the price on the Chicago Mercantile Exchange (CME) rising nearly 152% since March 26. These price movements have serious implications for the transportation sector and the economy as a whole. As winter approaches and heating fuel demand increases, the two companies are well positioned to benefit from rising diesel prices.

Why diesel prices matter to investors

The role of diesel fuel extends far beyond fueling trucks and heavy equipment. It is a critical component of the transport, agricultural and industrial sectors. Fluctuations in its prices spread throughout the economy. When diesel prices rise, transportation costs for businesses increase, affecting everything from shipping goods to operating farm equipment. These increased costs are often passed on to consumers in the form of higher prices for goods and services. For investors, understanding diesel market dynamics is critical, especially during periods of significant price movements.

The current rise in diesel fuel prices is especially noteworthy given the relatively low inventories of non-reactive distillates in the United States. As of December 20, 2024, these reserves stood at 116.5 million barrels, well below the five-year average (excluding 2020) of 125.4 million barrels. This combination of rising demand driven by cold weather forecasts and relatively low supply creates a favorable environment for energy companies.

Higher demand for diesel fuel translates into higher revenues and profitability for those involved in its production, refining and distribution. In addition, the market is awaiting the release of economic data, including the Chinese PMI survey and the US ISM survey, which could provide further insight into global oil demand. These factors, coupled with the potential for increased demand for diesel as a substitute for natural gas in heating systems, make a compelling investment case for energy stocks.

Chevron: Smart Energy Investment

Chevron today

$147.85 +1.14 (+0.78%)

As of 01/03/2025 17:45 Eastern

52 week range

$135.37

▼

$167.11

Dividend yield

4.41%

P/E ratio

16.25

Target price

$175.19

Chevron Corporation New York Stock Exchange: CVX is the second largest integrated oil company in the United States and a prime example of a company that is poised to benefit from current market conditions. With a market capitalization of approximately $265 billion and operations spanning the globe, Chevron’s diversified business model spans upstream and downstream segments. This vertical integration allows the company to generate profits across the entire energy supply chain, from exploration and production to refining and marketing.

Chevron is a Dividend Aristocrat with 37 years of consecutive dividend growth. The company recently declared a quarterly dividend of $1.63 per share. The announcement follows strong third-quarter 2024 performance, with Chevron reporting earnings of $4.5 billion and record cash flow from operations of $9.7 billion. These positive results, coupled with a strong balance sheet, highlight Chevron’s financial strength and its ability to provide investors with both capital appreciation and a stable income stream with a current dividend yield of 4.40%.

Chevron is focused on streamlining its operations and reducing costs. The company plans to reduce structural costs by $2 billion to $3 billion by the end of 2026. Part of this initiative includes planned restructuring costs of $0.7 billion to $0.9 billion after taxes in the fourth quarter of 2024. they are expected to contribute to improved efficiency and profitability in the long term. Chevron is also actively optimizing its portfolio, as evidenced by the announced $6.5 billion sale of Canadian assets.

ExxonMobil: Global Energy Leader

ExxonMobil today

$107.86 +0.55 (+0.51%)

As of 01/03/2025 17:45 Eastern

52 week range

$95.77

▼

$126.34

Dividend yield

3.67%

P/E ratio

13.43

Target price

$128.74

Exxon Mobil Corporation New York Stock Exchange: gold is also one of the world’s largest publicly traded international energy and petrochemical companies. The company creates another attractive investment opportunity in the current market conditions. With a market capitalization of approximately $475 billion and operations spanning the globe, ExxonMobil is a major player in all aspects of the energy industry. Exxon Mobil’s fiscal third quarter 2024 (3QFY24) earnings report showed earnings of $8.6 billion, or $1.92 per share, highlighting its continued financial strength. The company announced that it had achieved a record liquids production of 3.2 million barrels per day.

Like Chevron, ExxonMobil is a dividend aristocrat, boasting 42 straight years of dividend growth. The company announced a fourth-quarter dividend of $0.99 per share, an increase of 4%. The current dividend yield of 3.66% provides investors with a reliable income stream. ExxonMobil is committed to returning profits to shareholders and has set a goal of repurchasing more than $19 billion of shares in 2024. ExxonMobil has demonstrated its commitment to rewarding shareholders through consistent dividend growth and share repurchases, further enhancing its attractiveness to investors.

ExxonMobil is focused on optimizing its operations and achieving structural cost savings. The company has already achieved cumulative structural cost savings of $11.3 billion and is on track to achieve a total of $15 billion in savings by the end of 2027. supply investment, with cash capital expenditure expected to be between $27 billion and $29 billion.

Strategic winter investments

The current rise in diesel prices is driven by a combination of seasonal demand and supply constraints, presenting an attractive investment opportunity in energy stocks. Chevron and ExxonMobil, with their strong financial positions, diversified operations and commitment to dividend growth, are particularly well positioned to benefit from this trend. As winter approaches and heating fuel demand increases, these companies are poised to see revenue and profitability rise.

Chevron and ExxonMobil provide attractive investment opportunities for those looking to capitalize on the projected winter price increase. Both companies balance revenue and growth potential with strategies that position them for continued success in a changing energy landscape. Their commitment to long-term value and investments in low-carbon technologies make them suitable options for early-stage and mid-market investors navigating the dynamic energy market. Adding these stocks to portfolios before the winter price surge can be a strategic move for potential gains.

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