Top 10 ASX oil stocks and the Coronavirus impact

‘Global oil demand has been hit hard by the novel coronavirus (Covid-19) and the widespread shutdown of China’s economy.’

Oil prices & the first contraction in a decade

The Coronavirus (COVID-19) crisis looks to be creeping into every corner of the global economy, with China’s economy grinding to a halt, and new cases of the virus continuing to emerge across the globe each day.

Oil has been particularly impacted thus far.

Specifically, off the back of collapsing demand, over the last week oil prices have been hit hard: Brent fell 10.3% while WTI Crude slumped ~7%.

Indeed, as the International Energy Agency (IEA) recently noted: oil markets were already on shaky ground prior to the emergence of the Coronavirus crisis; its occurrence looks to have merely exacerbated matters.

The IEA notes that oil ‘demand is now expected to fall by 435 kb/d y-o-y in 1Q20, the first quarterly contraction in more than 10 years.’

As a result of this, the Agency has slashed their CY20 oil outlook, saying, ‘we have cut our 2020 growth forecast by 365 kb/d to 825 kb/d, the lowest since 2011.’

More generally, though many have tried to model the potential impact of COVID-19 by using the SARS outbreak as a benchmark, the IEA suggests such comparisons are misguided.

‘China has changed enormously since then,’ says the IEA. ‘Today, it is central to global supply chains and there has been an enormous increase in travel to and from the country, thus heightening the risk of the virus spreading.’

Top ASX-listed oil stocks (by market capitalisation)

Though the broader picture looks to be an unstable one, oil did stage a comeback of sorts today: with WTI surging around 2% and Brent gaining 4.49% before noon.

In step with that, some of Australia’s best oil stocks also saw their share prices run higher today.

The ASX itself was up 120 points before noon.

With that in mind, below we take a brief look at the ASX’s top oil stocks – ranked in terms of market capitalisation.

Name

Ticker

Share price

Market cap

Price target*

Rating*

BHP Group

BHP

$34.38

$101bn

$37.43

HOLD (70%)

Woodside Petroleum

WPL

$28.59

$26.9bn

$36.50

BUY (56%)

Santos

STO

$7.02

$14.6bn

$8.72

BUY (52%)

Origin Energy

ORG

$7.08

$12.4bn

$8.56

BUY (69%)

Oil Search

OSH

$5.53

$8.4bn

$6.92

BUY (43%)

Beach Energy

BPT

$1.82

$4.14bn

$2.32

BUY (43%)

Cooper Energy

COE

$0.49

$797m

$0.67

BUY (75%)

Carnarvon Petroleum

CVN

$0.27

$422m

$0.60

BUY (100%)

SENEX Energy

SXY

$0.28

$407m

$0.50

BUY (80%)

Strike Energy

STX

$0.15

$259m

$0.41

BUY (100%)

*Share prices and market capitalisation figures correct as of noon 3 March. 12-month price target and Ratings data taken from Bloomberg Data.

How to trade ASX oil stocks

Investors can trade any of the top 10 ASX oil stocks highlighted above, utilising CFDs, through IG’s world-class trading platform. For example, to buy (long) or sell (short) Santos using CFDs, follow these simple steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘Santos’ or ‘STO’ in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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