XOM - Why Oil Stocks Are in Rally Mode Today
Oil prices turned upward today, with WTI, the U.S. oil price benchmark, rising roughly 2% by 10:45 a.m. EDT. Fueling that rally was news that U.S. producers are starting to cut their output in a move that will help ease the glut of oil filling up storage terminals around the country. Those dual catalysts sent most energy stocks soaring, including shares of several major producers. Among the notable movers were Continental Resources (NYSE: CLR), Apache (NYSE: APA), Diamondback Energy (NASDAQ: FANG), and Murphy Oil (NYSE: MUR), which were all soaring more than 10% by early-morning trading. Meanwhile, oil giant ExxonMobil (NYSE: XOM) also rallied today, rising more than 5% by midmorning.
One of the main catalysts for the rise in oil prices and the shares of producers was a report that U.S. shale drillers are about to start cutting output. Continental Resources executive chairman Harold Hamm told S&P Global Platts that he believes U.S. producers will voluntarily slash their production by 30% to 35% in the near term. However, he said that this wasn't in response to a coordinated effort with OPEC but because there isn't enough demand or storage space.
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