Will OPEC Cut Production Deeper To Lift Coronavirus-Hit Oil?
Zacks Investment Research | Mar 03, 2020 08:46PM ET
Members of OPEC are gearing up to meet in Vienna tomorrow, while ministers from Russia and other allied exporters will join the cartel on the following day. There is a high possibility that the crude exporting countries will decide on an emergency production cut as there has been substantial slowdown in global energy demand owing to the rapid spread of the novel coronavirus.
Outbreak Hits Global Energy Demand
The growing number of coronavirus cases across the world has rattled equity markets. Per the compiled data of Johns Hopkins University, since the virus was first detected in China late last year, the total number of infected people across the world has increased to 93,123. On the bright side, the compiled data suggests the recovery of 54% of the total infected people.
China, the epicenter of the virus, is the biggest importer of crude in the world. As a result, the epidemic has severely dented global energy demand, leading to more than a 23% decline in West Texas intermediate oil prices.
OPEC+ May Deepen Existing Production Cut
To combat the weakening of the oil business, a panel of OPEC and its allies, together OPEC+, has considered deepening the existing production cut at a technical meeting held on Mar 3. It has been recommended by a panel of OPEC+ that the oil exporters will consider cutting production by an additional 1 million barrels per day (Bbl/D).
There has been growing optimism that OPEC+ will consider further deepening in the output cut when they meet in Vienna since the existing agreement (in place since Jan 1) of curbing production by 2.1 million Bbl/D – comprising voluntary extra cuts by Saudi Arabia – has proved ineffective to shore up energy demand globally.
Stocks to Gain
Oil price might recover if the allied producers decide on an emergency crude production cut. Hence, with growing optimism over crude recovery, it would be worthwhile to keep an eye on explorers since the business of upstream players is positively correlated to the price of the commodity.
We have shortlisted four oil stocks with strong presence in Permian — the most prolific basin in the United States. All the stocks currently carry a Zacks Rank #3 (Hold). You can see Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.