Taking Long Term View on Big Oil Stocks

Gas Pump
Mark Lennihan
Gas Pump

Robert Morris, oil and gas analyst at Banc of America Securities, told CNBC’s “Morning Call” that major oil companies such as Exxon-Mobil, Chevron and ConocoPhillips are still good investments.

“If you look at the upstream sector of the business, I think there’s still very good value,” Morris said. “If you look at what oil and gas stocks are reflecting right now, I think the stocks reflect less than $50 oil, yet oil is close to $65 a barrel today and natural gas is trading above $7.50. From a value perspective looking long-term, there’s still a lot of opportunity here.”

He said refinery outages have tightened gasoline supplies ahead of the summer driving season.

“What that has done is put crack spreads at very high levels and made gasoline inventories very tight heading into the summer driving season,” Morris said. “Refiners are just minting money right now.”

Gene Pisasale, senior energy analyst at Mercantile Capital Advisor, urged investors to take a long-term view when sizing up oil stocks.

“I think investors sometimes focus on short-term blips and miss the long-term story,” he said. “We haven’t built a new refinery in this country in about 30 years. Even with incremental creep in refining capacity, we’ll still have tight conditions as we have right now.”