What happened
Despite the unnerving volatility in the markets in March, some oil and gas stocks ended up with solid gains. That includes big names that don't often rise as much in such a short span of time, such as Chevron (CVX 1.04%), Halliburton (HAL), and Antero Resources (AR 6.20%). Those three stocks surged 13.1%, 12.9%, and 33.1%, respectively, in March, according to data from S&P Global Market Intelligence.
Oil and gas prices primarily drove the rally, but there were company-specific tailwinds as well for some of these stocks that are helping their momentum.
HAL data by YCharts.
So what
One of the biggest repercussions of the Russia-Ukraine conflict, perhaps, has been felt in the global commodity markets. Prices of commodities -- whether in the agricultural, metals, or energy sectors -- have shot through the roof in recent weeks.
With oil and gas prices zooming in early March, stocks across the sector shot up, too. Between Feb. 28 and March 8 alone, the price of West Texas Intermediate (WTI) crude surged nearly 30% on geopolitical concerns, especially after President Joe Biden announced plans to ban imports of Russian oil and liquified natural gas and signed an executive order on March 8. WTI is the primary oil benchmark price in the U.S.
While oil prices have given up some gains since, the latest development could send prices higher again. On April 7, Congress passed a bill to ban imports of oil and gas from Russia, and all that's left now is for Biden to sign it into law.
Image source: Getty Images.
Natural gas prices, meanwhile, rocketed to 13-year highs just yesterday, so you can expect stocks like Antero Resources to rally even higher as natural gas prices could generate massive cash flows for the company. Just this morning, Mizuho analyst Vincent Lovaglio raised Antero stock's price target to $56 from $28, based on rising natural gas prices.
Halliburton also received a price target upgrade from $32 to $42 from Stifel this morning. The oil-field services company's fourth-quarter numbers topped estimates, and Halliburton also announced a dividend raise.
Chevron, meanwhile, received a big price upgrade earlier this week from UBS analyst Luiz Carvalho, who raised the price target on the oil giant to $192 from $150.
Chevron impressed the market on the very first day of March when it hosted its annual investor day. The company said it expects to generate more cash for shareholders whether oil is $60 per barrel or $100, as it is a lot more "capital and cost efficient."
The company also bumped up its share buyback program to a range of $5 billion to $10 billion per year from the range of $3 billion to $5 billion, and said it expects operating cash flow per share to grow at a compound annual rate of 10% over the next five years. That should also drive dividend growth; Chevron's dividend per share has more than doubled since 2010.
Now what
While it's hard to predict where oil and gas prices will head next, any sanction on Russia could send prices surging again.
Investor interest in stocks like Chevron, though, could remain high anyway given the company's strong cash flow and dividend profile. Speculation is also ripe that Chevron could win an extension for its special license to operate in Venezuela. The U.S. presently has sanctions on Venezuelan oil, and Chevron conducts only minimal operations in the country.
An extension of its license or an easing of the sanctions, as is being speculated, should be a big win for Chevron as it'll help it boost oil production substantially at a time when global supply is already disrupted because of the ongoing war between Russia and Ukraine.
