Why Are Oil Stocks Up Today?

Oil prices rose after OPEC+ unexpectedly cut production 1.16 million barrels per day

50m ago · By Dana Blankenhorn, InvestorPlace Contributor

  • OPEC+ cut oil production by 1.16 million barrels/day, causing prices to spike 8%.
  • U.S. oil stocks were also up on the news.
  • Bank of America (BAC) has predicted 2023 prices of $100/barrel.

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Oil stocks - Why Are Oil Stocks Up Today?
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Oil stocks rose after OPEC+ announced a 1.16 million barrel/day production cut.

The cut was unexpected and was announced outside of OPEC’s usual meeting schedule. The Biden administration called it “ill-advised.” Crude oil prices rose 6.5% on international markets. WTI crude, the U.S. benchmark, traded at about $80/barrel. Brent Crude, the global benchmark, traded near $85.

Saudi Arabia, which cut production by 500,000 barrels/day, called the OPEC+ move a “precautionary” one aimed at creating stability in the oil market.

Stock in U.S. oil production companies rose sharply with Pioneer Natural Resources (NYSE:PXD) and EOG Resources (NYSE:EOG) both up 5% in pre-market trading on April 3. Integrated oil companies Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) were up 4%.

Oil Stocks and Oil Prices: How High, How Long?

Even as the cut was announced Gabon, an African member of OPEC presently pumping 200,000 barrels per day, was preparing to launch production at a new offshore field. Exxon Mobil has begun producing from its fields off Guyana and is already delivering 380,000 barrels/day.

The new discoveries and new production call into question how effective OPEC+ can be in maintaining high prices in the long term.


In the short run, the cut makes the Federal Reserve’s job of taming inflation more complicated. It also makes the administration’s decision not to buy new oil for the Strategic Petroleum Reserve (SPR) a week ago, when WTI briefly fell below $73, look like a missed opportunity.

Both producers and consumers claim price stability is their goal, but prices have been anything but stable. Oil traded at over $122/barrel last year, after Russia invaded Ukraine, and below $50/barrel during the worst of the 2020 Covid-19 lockdowns.

What Happens Next?

Bank of America (NYSE:BAC) predicted late last year oil prices could hit $100/barrel again this year. Most expect prices to average $80-$100 with China’s reopening driving much of the demand for oil.

The production cut will support the transition to renewables but will likely keep interest rates higher for longer than had been expected.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at [email protected], tweet him at @danablankenhorn, or subscribe to his Substack.



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