OPEC To Discuss Deeper Production Cuts To Underpin Volatile Oil Prices
Portfolio Pulse from Neil Dennis
OPEC is considering additional production cuts of 1 million barrels a day to support falling oil prices, on top of the existing 5 million b/d reduction. Crude oil prices rose on Monday, with Brent crude at $82.38 a barrel and WTI at $77.77. Oil majors Chevron, ConocoPhillips, and ExxonMobil have seen stock declines over the past month. The United States Oil Fund ETF also rose on Monday. The potential cuts are in response to fears of reduced demand due to slowing global growth and high interest rates.
November 20, 2023 | 6:32 pm
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POSITIVE IMPACT
ConocoPhillips saw a 6.6% decline in stock price over the past month. OPEC's potential production cuts could positively impact oil prices, which may benefit ConocoPhillips' stock in the short term.
ConocoPhillips could experience a short-term stock price increase if OPEC's production cuts lead to a rise in oil prices, improving the company's revenue outlook.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Chevron's stock fell 13.3% in the past month after announcing a $53 billion acquisition of Hess Corporation. With OPEC discussing further production cuts, oil prices and potentially Chevron's stock may see a short-term rise.
Chevron's recent stock decline may be mitigated by OPEC's potential production cuts, which could lead to higher oil prices and improved revenue prospects for Chevron.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
The United States Oil Fund (USO) ETF, which tracks the price of light sweet crude oil, was up 2.4% at $72.45. Further OPEC production cuts could lead to higher oil prices, potentially increasing USO's value.
As USO directly tracks the price of oil, any OPEC-induced price increases would likely have a corresponding positive effect on USO's ETF value in the short term.
CONFIDENCE 80
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
ExxonMobil's stock decreased by 5% in the past month. The company may see a short-term positive impact on its stock price if OPEC agrees to further production cuts, boosting oil prices.
ExxonMobil's stock, which has been under pressure, could benefit from higher oil prices resulting from OPEC's potential additional production cuts.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70