Tight supply caused by OPEC production cuts and higher demand is causing energy prices to surge to multi-year highs lately. Prominent energy stocks Occidental Petroleum (OXY) and Southwestern Energy (SWN) are well-positioned to profit substantially in the near term. But which of these stocks is a better buy now? Read more to find out.Occidental Petroleum Corporation (NYSE:OXY) and Southwestern Energy Company (NYSE:SWN) are two prominent players in the oil and gas industry. OXY engages in internationally acquiring, exploring, and developing oil and gas properties. The company operates through three segments ─ Oil and Gas; Chemical; and Marketing and Midstream. It also trades around its assets, including transportation and storage capacity, and invests in entities that conduct similar activities. On the other hand, SWN engages in the exploration, development, production, and transportation of natural gas, oil, and natural gas liquids (NGLs). The company focuses on the development of unconventional natural gas and oil reservoirs. It serves energy companies, utilities, and industrial purchasers of natural gas.
The oil and gas industry witnessed a huge surge in demand since the resumption of economic and industrial activities earlier this year. Though OPEC and its allies remain firm in their decision to continue production cuts to offset oversupply issues and recover the pre-pandemic global demand, the robust demand, tight inventories, and inflationary pressures have made the oil and natural gas prices hit multi-year highs recently.
Analysts forecast crude oil prices to hit $100/barrel in 2022. Investor rising optimism in the energy industry is evident from the Energy Select Sector SPDR ETF’s (XLE (NYSE:XLE)) 43.9% gains year-to-date, surpassing SPDR S&P 500 Trust ETF’s (SPY) 23.9% returns. The global oil and gas upstream activities market is expected to grow at a 6% CAGR and reach $4.24 billion by 2025. So, both OXY and SWN are expected to benefit.