Global Oil Demand May Improve In 2021: 2 Oil & Gas Stocks To Buy

Source: Haizhen Du, Shutterstock

Summary

  • According to the Canada Energy Regulator data, four out of five imported oil barrels were from the US in 2020.
  • Global demand for fossil fuels was strongly affected by the COVID-19 pandemic and Canada imported 555,000 barrels per day in 2020, down from 693,000 in 2019.
  • In the past few months, however, oil demand has reportedly increased around the world.

While Canada's overall oil imports was less in 2020 as compared to previous years, its reliance on American oil reportedly increased during the pandemic last year. According to the Canada Energy Regulator data, four out of five imported oil barrels were from the US in 2020. In other words, about 77 per cent of Canada’s oil imports came from the US last year, which was an increase of about five per cent year-over-year (YoY).

Canada, which imports oil from Saudi Arabia, Norway and Nigeria, ranks third in the world when it comes to proven oil reserves. However, due to operating expenses and the urge for maximizing margins, refiners often opt for imported oil.

Global demand for fossil fuels was strongly affected by the COVID-19 pandemic and Canada imported 555,000 barrels per day in 2020, down from 693,000 in 2019.

In the past few months, however, oil demand has reportedly increased around the world. According to a Deloitte report, it is expected to recover this year, although it will remain lower than the pre-pandemic levels.

The International Energy Agency (IEA) also recently increased its estimates for 2021’s global oil demand, based on further signs of economy recovery around the world.

Amid such projections, some investors may choose to turn their focus to the oil and gas sector. Here are two picks that might interest you if you're looking to invest in such energy stocks.

 

Canadian Natural Resources Limited (TSX:CNQ)


Canadian Natural Resources, with a market cap of C$ 46.6 billion, presently posts a price-to-book (P/B) ratio of about 1.441, as per TMX data.

The company’s quarterly dividend is C$ 0.47 at the moment, and has witnessed a dividend growth of 15.24 per cent in three years and that of 14.27 per cent in the last five years. Canadian Natural’s dividend yield stands at 4.789, as per TMX.

One-year stock performance of Canadian Natural Resources (Source: Refinitiv)

In the last one year, Canadian Natural stock surged by over 115 per cent. This year, it has climbed by over 28 per cent.

The company's net earnings in Q4 2020 stood at C$ 749 million, registering an increase of 25.4 per cent YoY. During the same period, its daily production of natural gas increased to 1,644 MMcf/d, up from 1,455 MMcf/d in Q4 2020.

 

Pembina Pipeline Corporation (TSX: PPL)


Pembina Pipeline Corporation currently posts a market cap of C$ 20.4 billion, as per TMX data. The energy distributor pays a monthly dividend of C$ 0.21, with a current dividend yield of 6.792 per cent.

One-year stock performance of Pembina Pipeline (Source: Refinitiv)

 

Pembina stock grew by over eight per cent in the last one year. This year, it has surged by some two per cent.

On the financial front, Pembina’s net revenue increased from C$ 3.1 billion in 2019 to C$ 3.4 billion in 2020. For the same period, its annual adjusted EBITDA stood at C$ 3.2 billion, up from that of C$ 3.1 billion.

 

The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.


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