Do you like to trade oil penny stocks? I don’t … To be honest, energy stocks aren’t my favorite stocks to trade. But you have to be prepared to take advantage of any opportunity the market gives you.
So if you’re looking for oil penny stocks to trade, you’re in the right place.
Oil’s had a rough year. First, the coronavirus market crash happened … Then the stay-at-home order knocked the commodity into negative territory for the first time ever. And it brought down oil stocks with it.
It could present some good opportunities for trades. Especially if the commodity price increases again.
So in this post, I’ll go over a list of promising oil stocks, including oil penny stocks for under $1. I’ll also clear up some of your questions.
Table of Contents
- 1 What Exactly Are Penny Oil Stocks?
- 2 List of 5 Hot Oil Penny Stocks to Watch in 2020
- 3 5 Top Oil Penny Stocks Under $1
- 4 Frequently Asked Questions About Oil Penny Stocks
- 5 Conclusion: Should You Consider Trading Oil Penny Stocks?
What Exactly Are Penny Oil Stocks?
Penny stocks are a great little niche of stocks that trade under $5 a share. Oil penny stocks are stocks of companies in the oil and gas industry. They can be in oil and gas production, mining, exploration, or any services related to oil.
They can trade on the major exchanges or on the OTC Markets. There’s a reason for the divide … The major exchanges have listing requirements that companies must meet to be listed.
One requirement for major exchanges is to maintain a minimum listing price. If the company’s share price falls below that, it gets delisted. When that happens, it often ends up on the OTC Markets.
The coronavirus brought a lot of uncertainty to the economy, the markets, and the oil industry. There’s been a huge drop in the demand for oil. People aren’t traveling as much as they used to, by car or by plane. And fewer people are commuting to work. Instead, they’re working remotely from home.
Will oil and oil stocks ever completely recover to pre-pandemic levels? Nobody knows for sure. But there can still be an opportunity to trade oil company stocks.
I don’t invest in penny stocks, I trade them. So I don’t really care what oil does over the long term. I look for my favorite patterns to trade so I can take advantage of the move … Then I move on to the next trade.
(*Please note that these kinds of trading results are not typical. Most traders lose money. It takes years of dedication, hard work, and discipline to learn how to trade. Individual results will vary. Trading is inherently risky. Before making any trades, remember to do your due diligence and never risk more than you can afford to lose.)
List of 5 Hot Oil Penny Stocks to Watch in 2020
I give my Trading Challenge students a daily watchlist, but it doesn’t mean I’ll trade every stock on the list. It’s called a watchlist because I’m watching the stocks on the list (duh). It’s not called a trading or buy list…
This isn’t a list of the best oil volatile later in the day than in the after-hours market. This is when traders and investors close out positions or spot stocks to buy right now. Use my watchlist for ideas but don’t trade them unless you find a setup that fits your strategy.
Want to know which stocks I’m watching each week? Subscribe to my no-cost weekly watchlist here.
NextDecade Corporation (NASDAQ: NEXT)
NextDecade Corporation (NASDAQ: NEXT) is what’s called an LNG developer. Natural gas supplies one-third of U.S. energy. Liquified natural gas is how it’s packaged for export.
Over the last month, NEXT stock has increased in volume and its price has fluctuated from the $1s to the $4s. Look to see if a chart pattern develops, like a breakout over the $2.20 area and if it can bounce back to its recent highs.
VAALCO Energy, Inc. (NYSE: EGY)
VAALCO Energy, Inc. (NYSE: EGY) is an energy company based out of Houston, Texas. It explores, develops, and produces crude oil and natural gas.
On September 30, the company announced its estimated third-quarter production for 2020. I’d watch to see if the stock can get over its previous area of resistance around the $1.50s.
Aemetis, Inc. (NASDAQ: AMTX)
Aemetis, Inc. (NASDAQ: AMTX) is an oil and gas refining company. Its new subsidiary company focuses on making liquid and gel sanitizers.
In mid-September, the price broke out above its previous resistance. From this point in the $2.25 area, it’s continued to climb.
Since the coronavirus pandemic started, the virus sector has been hot. Stocks can run on news related to the virus. Sanitizers definitely fall into this category.
Exterran Corporation (NYSE: EXTN)
Exterran Corporation (NYSE: EXTN) is an oil and gas equipment company. Looking at the chart from the last year, there have been some volatile price moves. But it’s been trading in a channel since December 2019. And it’s nearing support that’s been holding for a few months.
ProPetro Holding Corp. (NYSE: PUMP)
ProPetro Holding Corp. (NYSE: PUMP) is an oil and gas service company. It provides pumping, fracturing, and other services.
Before the March oil crash, the stock was trading around $20. Its low was in the $2.50s. and it’s now trading in the $4s.
This could prove that this is an undervalued oil stock. The next resistance area on the chart is the $6.50 area.
5 Top Oil Penny Stocks Under $1
If you like to trade ‘real’ penny stocks, check out this list of oil penny stocks trading for under $1.
Lonestar Resources US Inc. (OTCPK: LONEQ)
Lonestar Resources US Inc. (OTCPK: LONEQ) is an independent oil and gas company based out of Fort Worth, Texas.
On September 30, the company filed for reorganization under Chapter 11 bankruptcy. The company was also recently delisted from the Nasdaq and trades as an OTC pink sheet. The stock took a slight dip that day but had a big rally on October 1 and 2.
Restructuring for a company can be a good thing if they do it right. It’s worth watching for further news announcements to see if it can bounce.
Seadrill Limited (OTCQX: SDRLF)
Seadrill Limited (OTCQX: SDRLF) is an offshore oil and gas drilling company. It operates 35 drilling rigs and is based out of Bermuda.
After the collapse of the oil market, the company delisted from the New York Stock Exchange. It re-opened in June 2020 on the OTC Markets. When stocks arrive on the OTC Markets, they can sometimes find renewed interest.
Reconnaissance Energy Africa Ltd. (OTCQX: RECAF)
Reconnaissance Energy Africa Ltd. (OTCQX: RECAF) is a junior oil and gas company based out of Vancouver, B.C. Canda. It holds a 90% interest in an exploration license in Namibia, Africa.
On September 30, the company was uplisted to the OTC Best Markets (OTCQX) from the OTC Pink Sheets (OTCPK). Uplisting means it’s met a higher standard of disclosure and transparency. This could create more investor interest and confidence in the company.
It has resistance around 90 cents. It could be a breakout play if it can get above that area.
Petrogress, Inc. (OTCPK: PGAS)
Petrogress, Inc. (OTCPK: PGAS) is based out of Delaware. But it’s involved with the exploration and production of crude oil in Africa.
The stock has seen increased trading volume since June. With this increased interest, there could be a trading opportunity. On October 21, it had a big volume day and broke above 5 cents. I’ll be watching for continuation.
But don’t try to predict stock moves. I always react, not predict. There’s no trade unless all the right indicators present themselves. Use the Sykes Sliding Scale to determine if a trade is worth taking.
To learn more about trading indicators, get my “Trader Checklist Part Deux” DVD. These indicators are very important to cut out trades that don’t have high odds. Only trade high odds setups.
Borr Drilling Limited (NYSE: BORR)
Borr Drilling Limited (NYSE: BORR) is an offshore drilling contractor. The Bermuda-based company serves oil and gas exploration in the region.
The stock has made big moves in the past. In June 2020, the stock went from the $1s to almost $3 in two days. I always like former supernovas. But it needs a news catalyst or volume to get the momentum going again.
This is something I know well — I created the term ‘supernova’ to describe these spikers a decade ago. I also created Supernova Alerts. These alerts can help you confirm potential supernovas before they happen. Sign up here to get the alerts for zero cost.
Frequently Asked Questions About Oil Penny Stocks
Let’s go over some of the questions about oil penny stocks that I get asked most often. Remember to always do your research before trading or investing in any company.
What Oil Stocks Dropped the Most in 2020?
After oil crashed in March 2020, some stocks recovered slightly. Others weren’t so lucky. Callon Petroleum Company (NYSE: CPE), SM Energy Company (NYSE: SM), and Matador Resources Company (NYSE: MTDR) are still well below their pre-crash values.
What Are the Fastest Growing Oil Penny Stocks?
Look for companies with big news. Maybe that’s finding a new supply of oil or signing new contracts. Just like other penny stocks, you’re looking for a news catalyst, volume, and hype. Then you can ride the momentum.
Is it Illegal to Trade Oil Penny Stocks?
No, it’s not illegal to trade oil penny stocks. But there can be a lot of lies and misconceptions in the penny stock niche. My goal as a teacher is to bring transparency to this industry. Before trading any oil penny stocks, make sure you have a strategy and a plan.
NEVER just wake up at the market open looking to trade, one of my most important lessons is that I consider myself a retired trader & only come out of retirement to trade when there’s a play that’s good enough where I’d feel guilty missing it! Very counter-intuitive, very useful!
— Timothy Sykes (@timothysykes) October 1, 2020
Conclusion: Should You Consider Trading Oil Penny Stocks?
I personally don’t like to trade energy stocks. They’re just not my thing. When you’ve been in the market as long as I have, you learn what works for you and what doesn’t.
But when a perfect opportunity presents itself, I make sure I’m ready. This is my advice for trading oil stocks and anything else. Before you jump into trading, focus on your education.
Study your butt off to give yourself the best odds of success. My top students made studying their priority and it’s paid off for them.* Apply now for my Trading Challenge for the opportunity to trade alongside them and me. But only if you’re dedicated.
But of course, you’ll still slip up, even I still do after 20+ years of trading. Losses are a part of the game.
That’s why rule #1 is to cut losses quickly. This can prevent a small mistake from turning into a huge disaster.
Do you like to trade oil penny stocks? Do you have a favorite that’s not on my watchlist? Let me know in the comments… I love to hear from my readers!