Why ConocoPhillips, Chevron, and Cheniere Energy Stocks All Dropped Today

A weak report on the U.S. economy sparked a sell-off in stocks this morning. U.S. GDP declined at an annualized 0.3% in Q1 2025. Since economists had been forecasting 0.4% GDP growth, this came as something of a disappointment.

Green energy efforts notwithstanding, the U.S. economy still largely runs on oil, and worries about a slowdown are weighing on oil and gas stocks as a result. OilPrice.com reports WTI crude oil prices are down 1.4% today to about $59.50 per barrel. Brent crude is likewise down about 1.4% at about $63.30.

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ConocoPhillips (NYSE: COP) stock was down 2% at the 11:30 a.m. ET mark, while Chevron (NYSE: CVX) was down 2.2%. Liquefied natural gas exporter Cheniere Energy (NYSE: LNG) was taking it even more on the chin with a 3.6% loss before noon.

Today in oil and gas news

Should oil and gas stock investors be reacting this harshly to GDP worries, though? That depends. The U.S. Energy Information Administration notes that crude inventories in the U.S. shrank by 2.7 million barrels over the past week, seemingly contradicting yesterday's report from the American Petroleum Institute that inventories were up.

Logically, rising inventories (rising supply) should mean falling prices. However, falling inventories (less supply), given constant demand, should mean that oil prices will rise. Given the conflicting reports on supply, investors today seem to be looking to the GDP report as a tie-breaker, and assuming that if the economy is shrinking, so too will demand for oil, weakening prices in the future no matter what's going on with supply today.

At the same time, the situation with investors' feelings about Cheniere is much easier to explain. This morning, Wolfe Research downgraded Cheniere stock to "peer perform" (i.e. hold) on worries that the company's competitors are expanding supplies of LNG, putting "downward pressure on returns on growth projects," according to a report by TheFly.com.

The combination of generalized energy market worries, plus a downgrade specific to Cheniere, explains why this particular stock is responding worse than most.

Is it time to buy energy stocks?

So how should an individual investor parse all of the above? Oil and gas is a famously cyclical industry in which undersupply and high prices lead to overinvestment to capture the excess profits, which in turn leads to oversupply and low prices, which causes investment to get cut back until prices revive. This happens over and over.

As such, if you want to make money in oil and gas stocks, you must think long term.

In the case of the three stocks I'm looking at today:

• Chevron, which costs more than 14 times trailing earnings, pays a 4.9% dividend yield, and is expected to grow at nearly 8% annually over the next five years.
• ConocoPhillips, which costs less than 12 times trailing earnings, pays only a 3.4% dividend yield, and is only expected to grow earnings at 6%.
• Cheniere Energy, which costs nearly 17 times earnings, pays a meager 0.8% dividend yield, and is also sitting at an earnings peak, with profits expected to be lower than last year's for the next three years.

This decision is easy. Chevron stock looks like the closest thing to a bargain at a total return ratio of just over 1.0. Conoco looks cheaper than Chevron based solely on its P/E ratio, but neither its dividend nor its growth rate measure up to its rival.

And Cheniere looks just plain unattractive to me, full stop. Twist my arm and ask me to choose between just these three energy stocks, therefore, and I'd have to go with Chevron.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cheniere Energy and Chevron. The Motley Fool has a disclosure policy.