OVV - Crude oil energy stocks pull back from earlier gains after Saudi production cut

2023-06-05 10:31:51 ET

Oil and gas stocks failed to maintain initial gains in early trading Monday after Saudi Arabia pledged to cut oil production by an additional 1M bbl/day and OPEC+ agreed to extend their current production targets through 2024.

Brent crude oil ( CO1:COM ) for August delivery +0.9% to $76.80/bbl, pulling back from earlier gains exceeding 3%, and WTI crude oil ( CL1:COM ) for July delivery +0.7% to $72.27/bbl.

Big oil stocks are decidedly mixed in early trading, including Chevron ( CVX ) +0.4% , Exxon Mobil ( XOM ) +0.1% , ConocoPhillips ( COP ) -0.2% , Marathon Oil ( MRO ) -0.8% , Ovintiv ( OVV ) +1.9% .

ETFs: ( NYSEARCA: XLE ), ( NYSEARCA: XOP ), ( VDE ), ( OIH ), ( XES ), ( IEZ )

After the initial news, oil and gas equities likely will rise or fall based on the outlook for energy demand, Jefferies analysts said: "Initially oil markets and equities are likely to react positively, especially given the generally negative positioning... Subsequently, though, the equities have historically then worried about (a) demand implications and (b) when that oil comes back on."

Analysts at ANZ maintained their year-end target of $100/bbl for Brent crude but said price gains may be limited in the short term until there are signs of actual tightening in the physical market.

The head of the International Energy Agency, Fatih Birol, said the chance of higher oil prices had " increased a lot " as a result of the Saudi and OPEC+ moves.

For further details see: