EOG Resources: US producer may profit from rising oil prices
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Commodities - Technical Analysis
The prices of the two precious metals corrected higher, reaching their downtrend lines, from which they turned downward again. These charts still do not offer significant long opportunities. Oil, on the other hand, broke through the minor corrective trend line and has resumed its upward trajectory. A return to the previous price level around 120 is also a possibility. The price of natural gas may currently test the downward trend line before turning upward. Copper has reached the expected level where its longer-term upward trend was extending, so it has also begun an upward correction. Wheat and corn prices appear to be consolidating as long as their key support levels remain intact.
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Alibaba reported quarterly results in March that fell short of expectations; fierce competition in e-commerce continues to weigh on profitability, despite strong performance in the cloud business. Looking ahead, however, the situation may be on a path to gradual improvement, while new launches continue to roll out in AI services, which could represent significant business potential for the coming years. The market still does not price this in at current price levels, so even if heavy capex spending have a negative impact on performance in the short term, the company may be able to outgrow this over time. Moreover, due to the decline in share prices over the past few months, valuation levels are now more favorable, so we are maintaining the stock on our Equity Top Pick List.
In recent months, metals have been in the spotlight among commodities, while the energy complex, including oil, has suffered. However, following a downward trend since 2022, this sector has also shown some signs of life recently, which may be due to a decline in oil drilling activity, tensions between the US and Iran, and a weakening dollar. One of the largest US oil and gas producers, EOG Resources, which has low costs and strong cash flow, could benefit from this situation. Moreover, country risk is minimal, as production takes place almost entirely in the US and valuations are not high, hence we open a trading idea for the company's stocks.
Oil price on the rise again
The past few months have been dominated by precious metals, whose prices have risen parabolically, with gold and silver reaching new historic highs and becoming the subject of public discourse. In addition, industrial metals have also begun to show signs of life, with copper rising to record levels and lithium prices also jumping significantly. However, the energy and agricultural sectors have so far been almost completely left out of the big commodity market rally. This is particularly true for oil, whose price has practically halved compared to its 2022 peak.
In recent months, fears of oversupply have kept pressure on the oil sector, as the oil cartel released large quantities of oil back onto the market in 2025, while US production increased as well and there were (and still are) uncertainties on the demand side due to the trade war. The IEA, for example, expects a surplus of more than 3.8 million barrels in 2026 (~3-4% oversupply), although OPEC is more optimistic and expects significantly higher demand growth.
Concerns aside, oil prices have been on the rise again since hitting lows below $60 in mid-December and are up more than 12% since the beginning of the year (it should be noted that other members of the energy complex, such as uranium and European natural gas, have also found their footing). Possible reasons for this include the renewed tensions between the US and Iran related to the Iranian protests and a possible regime change. In addition, the weakening of the dollar and the lower interest rate environment are also providing a tailwind for commodities in general (albeit the volatility is significant).
Thirdly, lower oil prices have also left their mark on US shale oil production (e.g., oil billionaire Harold Hamm recently stated that, for the first time in 30 years, his company will conduct no drilling in North Dakota due to low prices). This is confirmed by Baker Hughes' activity data, which shows that oil drilling has fallen to a multi-year low. According to the EIA's forecast (January 2026), US crude oil production in 2026 will be similar to last year (13.6 million barrels of crude oil per day), which may fall to 13.3 million in 2027. Of course, we note that the EIA forecasts lower oil prices as well (an average of $56 in 2026), so it is worth interpreting the figures within this context.
Overall, there has been some improvement in the oil market, and macroeconomic factors are also supportive for the time being, so even a moderate improvement in the previously strongly negative sentiment could lead to further price increases. Nevertheless, there are still plenty of uncertainty factors (e.g., the possibility of a Russian-Ukrainian peace agreement, oversupply has not disappeared, etc.).
From a technical perspective, the oil price turned around after a long and slow decline. It managed to close above 62.5, which is a positive sign, opening up the possibility of a trend-like rise. The near-term target price could be ~68.75, but 75 is also worth considering.
EOG Resources: premium US oil and gas producer
EOG Resources is one of the largest US oil and gas producers, with a market capitalization of more than $60 billion. One of the company's focuses is on keeping costs low, which means it is essentially among the premium / cheapest producers.
Based on management forecasts, EOG is expected to produce an average of more than 1.2 million barrels of oil equivalent per day this year (approximately 43% oil, 23% NGL and 34% natural gas). The United States accounts for 97% of production, while Trinidad for the remaining 3%, thus country risk is minimal.
The company published its Q3 earnings report on November 6 last year. Despite lower prices, EOG generated a profit of $7.8 per share Q1-Q3 (-13% YoY), so it is still very profitable. Net debt is approximately $4.6 billion, which is not considered high (operating cash flow of more than $7 billion in the first nine months of 2025).
In addition, EOG acquired the oil producer Encino in August last year in a cash transaction worth USD 4.5 billion and assumed USD 1.2 billion in bond liabilities (which the company has already paid off in full since the acquisition). Encino's production is equivalent to more than 230,000 barrels of oil per day (20% oil, 30% NGL, 50% natural gas).
EOG's valuation is not high, with 2025 expected EPS the P/E ratio is 11x, while EV/EBITDA is 5.4x. The ratios for 2026 are similar, so EOG is not a growth story, but further acquisitions are of course possible.
The company also pays dividends, currently at $1.02 per quarter (annualized dividend yield of 3.7%; ~$2.2 billion / year), and continues to repurchase shares (approximately $1.8 billion in 2025).
The company's quarterly earnings report is still some way off, arriving on February 25.
EOG Resources technical picture
A reversal pattern in forming on the curve, so we see the possibility of a more sustained rise. The trend could break within days if it closes above 112.5. The stock previously moved within a wide range, so we assume that at least the upper part of that range is achievable. With an entry around the current price, we are targeting the natural level of 134.35. We are setting the risk management level at 101.56.
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