U.S. oil benchmark West Texas Intermediate fell 0.57% today to $71.74 a barrel and international benchmark Brent crude lost 0.46% to $76.31 a barrel. In spite of a big cut in production announced this weekend by Saud Arabia. The voluntary cut of an extra 1 million barrels a day in July will take Saudi production to its lowest level in years.
Just in case there are readers who don’t watch my videos, but do follow my picks. Today, April 5, I added Devon Energy (DVN) to my Jubak Picks, Dividend, and Volatility Portfolios.
Today oil prices and oil stocks are soaring on the bullish case that the surprise OPEC+ production cut will push gasoline to $4 a gallon and oil to $100 a barrel. Not everyone buys the bullish case–at least not after a few days of what these analysts call a knee-jerk reaction. And they’ve got a point
Today the prices of oil and oil stocks have soared. At 11:20 a.m. New York time U.S. crude benchmark West Texas Intermediate was up 5.37% to $79.73 a barrel. International benchmark Brent crude was higher by 5.24% to $84.08 a barrel. Among oil stocks, Pioneer Natural Resources (PXD) was up 3.53%; ExxonMobil (XOM ) was up 5.48%; Chevron (CVX) was up 3.73%; Equinor (EQNR) was up 5.91%; and ConocoPhillips (COP) was up 7.79% The U.S. Oil Fund (USO) was higher by 5.40%.
Sunday’s surprise Saudi supply cut will send oil prices higher and to take a bite (your guess is as good as mine) out of the financial markets. On Sunday, April 2 (thank goodness this wasn’t announced yesterday on April Fool’s Day) OPEC+ announced a surprise oil production cut of more than 1 million barrels a day. The organization had not so long ago promised assurances that it would hold supply steady. Supply was already looking tight for the second half of the year and this round of cuts–led by Saudi Arabia’s, 500,000 barrel-a-day reduction–will send oil prices higher.
Oil prices fell again in February with crude dropping another $2 a barrel on the month. Crude prices really didn’t show much of a trend in February as worries over an economic slowdown caused by higher interest rates battled signs of tighter supply. The reading range for the month was the smallest since July 2021. Signs of increased demand from China and the continued bite of sanctions against Russia point to gains for oil in coming months.
As of 12:45 p.m. on Monday, December 5, U.S. benchmark crude West Texas Intermediate was down 1.63% to $76.68 a barrel. International benchmark Brent crude was down 1.39% to $84.38 a barrel. Brent is now up 11% this year but down from $120 a barrel in June. The market is a battleground today between cuts to supply and worries about a slump in global demand.
On Friday, the European Union agreed to impose a $ 60-a-barrel cap on all purchases of Russian oil. Pay more than that and sanctions kick in that include a ban on shipping and insurance on any oil shipments when the oil has been purchased above the $60 a barrel price. That would have produced enough chaos on its own since the announcement of the cap came before oil, insurance, and shipping companies saw the full details of the sanctions. That effect is that nobody will be quite sure what purchases will trigger what sanctions when trading begins on Monday morning. One possibility is that conservative company lawyers will decide not to do a deal when they can’t figure out the consequences. At the least, that problem will slow the market on Monday. And then today, Russia announced that it will not accept the $60 per barrel price cap for its crude oil Nobody has any idea what that means (but I’ll give you my read below) Suffice it to say, that oil market chaos is a possibility
Today, November 29, U.S. crude benchmark West Texas Intermediate traded at $78.45 a barrel. International benchmark Brent crude was at $83.26 a barrel. A month ago on October 28, West Texas Intermediate closed at $88.11 a barrel and Brent at $95.94. That price plunge is the background for Sunday’s regular meeting of OPEC+ oil ministers. Market speculation points to a strong chance of another cut in production following on the cut announced at the group’s October meeting. At the least, oil analysts say, OPEC+ will extend the October production cuts through the end of 2023.
On Monday Russia launched “a massive strike (the words of Russian President Vladimir Putin) on civilian infrastructure, including crowded train stations, in Ukraine in retaliation for the explosions Saturday that destroyed a crucial ridge linking Russian-occupied Crimea to Russia. Russia has blamed Ukraine for the destruction of the bridge. The Ukrainian government has, so far, not claimed responsibility for the action, but U.S. sources are telling the Washington Post and the New York Times that the destruction was the work of Ukrainian special forces. The Russian attacks were horrifically indiscriminate. According to the Washington Post, the attack caused electricity outages and disrupted water supplies in cities across Ukraine. For a third night in the past week, a residential apartment building in the southeastern city of Zaporizhzhia was hit. In Kyiv, the missiles caused heavy explosions around 8:15 a.m., leaving vehicles in flames near Taras Shevchenko Park — on a road often jammed with rush-hour traffic. Besides a general increase in fear and uncertainty–the VIX “fear index claimed 5.99% to 33.24 as of noon in New York on Monday, October 10–in the financial markets, I think investors should focus on the implications for the oil market and oil prices.
Should be an interesting day in the oil markets tomorrow, Wednesday, October 5. After a rally in oil stocks and oil prices themselves on Monday on an informed rumor that OPEC+ was considering a cut in production of 1 million barrels a day at its Wednesday meeting, today the rally kept going as speculation extended to the possibility of a cut in production of as much as 2 million barrels a day. U.S. benchmark West Texas Intermediate ended up 3.46% to $86.52 a barrel. International benchmark Brent rose 3.18% to $91.69 a barrel.
I hope that President Joe Biden got a T-shirt on his August trip to Saudi Arabia. You know one that says “I went to Saudi Arabia and all I got was this lousy T-shirt.” Because the U.S. President sure didn’t get a surge in OPEC oil production. In September the oil cartel plus Russia agreed on a piddling 100,000 barrel a day increase in production in response to pleas from President Biden and other Western leaders to an increase in oil production to combat soaring energy proved. On Sunday, OPEC took back that entire increase
