Oil Price Increase Ensures Profit for Commodity Sector Companies in the Coming Months

Due to the Rise in Fuel Prices from Oil, Companies in the Commodity Sector Will Maintain Their Profit Over the Next Few Months

The giant Petrobras, as well as other publicly traded oil companies, are expected to continue reporting good results in the upcoming quarters of 2022, according to specialists consulted by the Broadcast website. The company released its earnings report related to the commodity on Thursday evening (5), showing a 3,718% increase in profit in the first quarter of this year, compared to the same period last year, and a 41.4% increase compared to the last three months of the year, totaling R$ 44.5 billion.

According to Infomoney, the reason for believing in profit over the coming months is the hope that oil prices will continue to rise with demand exceeding supply, due to sanctions imposed by the European Union on Russia, with a total embargo on the commodity – products of animal origin or mineral extraction in raw form, whose prices are determined by international supply and demand of the merchandise. Oil is a commodity.

According to Nicolas Silva, head of the Expert Desk at CM Capital, even with OPEC’s (Organization of the Petroleum Exporting Countries and allies) plan to maintain increases in commodity production, the decline in oil stocks is likely to raise its price.

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In April, the international scenario regarding oil was tumultuous, allowing sector companies to “challenge” market behavior since their shares stood out while the stock market in Brazil and abroad saw significant declines, recalls Fernando Damasceno, analyst at Modalmais. In parallel, commodity companies nearly did not register maintenance stoppages. According to Damasceno, Brent oil prices are expected to settle above US$ 100 in the coming months, which will guarantee satisfactory results for companies in the commodity sector.

Dividend Payments Also Boost the Oil Sector

Another factor that could generate substantial profits for the oil sector is the payment of dividends, specifically for the company Petrobras. Yesterday, the company announced anticipated earnings of about R$ 3.17 per share to be paid to shareholders on its database until May 23, 2021. This data refers to the first quarter of the year.
For Ricardo Peretti, equity strategist at Santander Brokerage, the news that the commodity is generating profits for sector companies may keep investors excited at the forefront while downplaying concerns about the 5% annual increase in oil extraction costs predicted for commodity companies.
The two “but” factors regarding the positive profit outlook for oil sector companies were only considered taking into account the effects of lockdowns in China due to the COVID-19 outbreak, which may hinder the development of growth in the Asian country, reflecting on the global economy. Additionally, there are also the upcoming elections in Brazil, which generate turbulence in the country and may create, especially for Petrobras, the risk of political interference, reports Rodrigo Crespi, analyst at Guide Investimentos. This Friday, 07, during the earnings presentation made by Petrobras, President Jair Bolsonaro once again attacked the oil company, criticizing its profit and calling again for Petrobras not to pass on the new fuel price increases.

Regarding Top Picks recommendations – investments that an institution shows to its clients – for the next week, Ativa opted to completely change its portfolio. Camil ON, Gol PN, SulAmérica ON, Natura ON, and Banco Inter Unit were removed to include BRF ON, Cosan ON, Marfrig ON, Lojas Renner ON, and Vale ON.
BB Investimentos only kept Petrobras PN in its portfolio and replaced Kepler Weber ON, Multiplan ON, Portobello ON, and Trisul ON with Alpargatas PN, Bradesco PN, Suzano ON, and Taesa Unit. You can check the other stocks here at this link.