This Could Be a Game-Changer for Oil Stocks

There has been a notable strategy shift within the oil patch over the past several months. Several leading producers have adjusted their message to investors from how fast they can grow production in the current pricing environment to how much they can increase shareholder returns.

This shift could be a difference-maker for shareholders, because it means companies would spend less money trying to produce more oil that the market doesn't need at the moment, which would give them more cash to return to shareholders through dividends and buybacks. The ramp-up in cash returns alone should boost stock prices, while the potential reduction in production growth should help keep the oil market balanced, which has the potential to send oil prices and producer profitability higher and could take oil stock prices up with it.

Image source: Getty Images.

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Source: Fool.com