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Oil and gas prices rose to multi-year highs this year, driven by solid demand amid supply cuts. As of December 15, gasoline prices had risen 58.1% over the last year, their largest increase since April 1980. In addition, fuel oil prices increased 59.3%, while natural gas prices rose 25.1% over the past year.
According to the U.S. Energy Information Administration (EIA), U.S. implied petroleum products demand rose to a record 23.191 million bpd for the week ending December 10. Oil prices rose approximately 2% yesterday on the EIA’s report and Fed’s interest-rate-increase timeline, removing some uncertainties. Given the upbeat backdrop, we think oil and gas companies PDCE and SWN should benefit. Over the past nine months, PDCE’s stock has gained 22.8% in price, while SWN has returned 5.1%. In terms of their past year’s performance, PDCE is the winner with 139.3% gains versus SWN’s 48.2%. Also, PDCE’s 125.8% gains year-to-date compare with SWN’s 52.7% returns.
