Best US Energy Stocks

What are US Energy Stocks?

The energy sector comprises companies that explore, produce, and market – oil, gas, and other renewable resources all over the world. Stocks in the energy sector include upstream and downstream companies. Upstream companies explore oil or gas reserves. Downstream companies are the ones that refine and process oil and gas products for consumer consumption.

Some of the popular companies in the Energy sector include APA Corp., Marathon Petroleum Corp., Brookfield Renewable and Chevron.

Who Should Invest in US Energy Stocks?

Oil and natural gas companies, in particular, are highly volatile, hence, making it challenging to invest in the energy sector. Prices for energy stocks fluctuate quite fast. This volatility can have a huge effect on the sector and the world economy as a whole.

Due to how volatile commodity prices can affect the energy sector, investors must be cautious while buying energy stocks. This means thinking about downside risk and not allocating too many funds into one energy stock or the energy industry as a whole. Investors should put their money into those oil and natural gas companies that are financially and operationally strong enough to stay in business even if the industry’s conditions get much worse.

Furthermore, investors can pick stocks that are producing renewable energy.

Energy Sector Outlook in the US

The energy sector is very important to the world economy as it generates the fuel and electricity that make the trade and travel possible. But when the economy slows down, as it did during the COVID-19 pandemic, it can greatly affect how much energy people want and how much it costs.

When people stopped using oil and natural gas in the early days of the pandemic, prices dropped. But as consumption picked up in 2021, it rose sharply. 

The Russian war in Ukraine hurt the stock market and messed up global supply chains. This made energy prices go up and made people worry about energy security. Furthermore, the way the world gets its energy is changing in a big way. 

Higher prices and global changes have influenced many countries to switch to renewable energy sources and reach a net zero carbon footprint. As per a McKinsey report, 64 countries have passed laws to reach ‘net zero carbon emission’ in the next few decades. Hydrogen, power, and synfuels will make up 32% of the world’s energy mix by 2035 and 50% by 2050.