Best Oil Stocks Right Now

Oil stocks have been in the spotlight during the coronavirus crisis, but not for the reasons investors would prefer. While international events and transportation issues have impacted the sector, oil remains a multi-trillion dollar industry with various subsectors and business models. Oil companies can be classified into three main groups based on their role in the pipeline: upstream, midstream, and downstream.

Upstream companies focus on discovering oil reserves and extracting it from the ground. They face significant financial challenges due to the high costs of drilling and mining equipment. Examples of upstream firms include Occidental Petroleum and Whiting Petroleum. Midstream companies are responsible for transporting and storing raw petroleum products.

They often operate pipelines or own oil tankers, connecting drillers to refiners and retailers. Downstream companies refine the raw product into various petroleum products, such as gasoline, heating oil, and engine oil, and may also be involved in midstream operations.

When considering investing in oil stocks, it's essential to understand the specific sector in which the company operates, as this affects their operations and response to market shifts. Integrated oil producers, like ExxonMobil, have branches in all three sectors and can be impacted by various factors, including OPEC restrictions, global events, and changes in demand.

Before investing, ensure that the brokerage account you choose has access to the desired oil company shares and does not charge excessive fees or commissions.