3 ASX Stocks to Benefit from Rising Oil Prices

With oil prices surging over 26 per cent from January this year, the big question looming is whether investors have missed the boat on a golden buying opportunity or if there is still time to buy Australian oil companies that are primed for growth. Well, you will be relieved to learn that there are still some great opportunities, and I've got my eye on three ASX-listed oil companies that fit the category.

Which stocks will gain from increasing oil prices?

First up is Woodside Energy. Despite the company's share price falling since 2022, rising oil prices benefit Woodside because it can increase profits by selling the oil and gas it produces at higher prices. If the company can also keep production costs steady, the potential higher earnings will inevitably be a positive sign for the share price moving forward. From a technical standpoint, Woodside’s share price seems to have found support at $28, so keep an eye on this as it’s a very good company.

Next up is one of the biggest stocks on our market, BHP. Like Woodside, it also benefits from higher oil prices because it can increase revenues from selling its petroleum assets. BHP’s share price has been trading mostly sideways for the past three years, and it recently tested a previous support level at $42. If the share price can start to rise in a sustained move, I expect a re-test of the $50 dollar level over the coming months and a move higher over the longer term.

Last but not least is Viva Energy. Viva is different from the other two stocks in that it refines oil into products such as gasoline and diesel. Nevertheless, higher oil prices could increase their profit margin, although it could also increase the cost of production.

Viva’s share price has risen nicely, increasing over 200 per cent since March 2020. That said, the stock has started falling recently, so I will be watching it very closely. There is support around $3.40, and if this level holds, which is likely, it will provide the next buying opportunity.

What were the best and worst-performing sectors last week?

The best-performing sectors included Utilities, up 2.92 per cent followed by Materials, up 2.90 per cent and Industrials, up 1.23 per cent. The worst-performing sectors included Real Estate, down 2.05 per cent, followed by Consumer Staples, down 1.40 per cent and Energy, down 1.08 per cent.

The best-performing stocks in the ASX top 100 included Whitehaven Coal, up 9.87 per cent followed by Ansell, up 8.75 per cent and Lynas Rare Earths up 8.66 per cent. The worst-performing stocks included Bank of Queensland, down 6.52 per cent followed by Sonic Healthcare, down 6.49 per cent and IDP Education down 5.86 per cent.

What's next for the Australian stock market?

Buyers took back control early last week, with the All-ordinaries index rising over one 1 per cent. However, sellers returned in the last two days to push prices lower, with the market closing 0.3 per cent higher for the week.

What I find interesting is that since January of this year, sellers have attempted to push prices down on a weekly basis four times; however, each time, buyers have swiftly countered, erasing the sellers' efforts and propelling prices to new highs within a week or two. Given the recent pattern, I see no sign of things changing in the next week or so.

As such, I anticipate that buyers will continue to push the index to a new all-time high before the end of April. That said, as mentioned in previous reports, I see potential short-term resistance to the up move around the 8,200 to 8,400 level. Given the market was trading near the lower end of that range at the start of the month, it is possible that is the high for April and we could expect more downside over the coming weeks.

That said, if the market starts to rise very strongly this week, which is possible as April is historically a volatile month, then the price of the All Ordinaries Index might blow through 8,400. If that occurs, there is potential resistance at the 8,600 level.

Turning to the sectors, we have seen Energy and Materials perform very well over the last couple of weeks, and my enthusiasm for these two sectors remains strong in the short to medium term. However, another sector benefiting from their growth is the Utilities sector, which is looking really good from a technical perspective at the moment.

If prices continue to climb, the Utilities sector may make new all-time highs before the year concludes. Therefore, now is a prime opportunity to start looking at stocks in this sector to uncover potential trading opportunities.

For now, good luck and good trading.

Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.