On Sunday, April 2 OPEC+ announced a surprise oil production cut of more than 1 million barrels a day. The organization had not so long ago promised that it would hold supply steady. Saudi Arabia led the move by pledging its own 500,000 barrel-a-day supply reduction. Fellow members including Kuwait, the United Arab Emirates, and Algeria followed suit. Russia, a member of the larger OPEC+ cartel, said it would implement a production cut already announced in March for the period from March to June and then continue that cut until the end of 2023.
Monday the prices of oil and oil stocks soared.
At 11:20 a.m. New York time U.S. crude benchmark West Texas Intermediate was up 5.37% to $79.73 a barrel. International benchmark Brent crude was higher by 5.24% to $84.08 a barrel.
Among oil stocks, Pioneer Natural Resources (PXD) was up 3.53%; ExxonMobil (XOM ) was up 5.48%; Chevron (CVX) was up 3.73%; Equinor (EQNR) was up 5.91%; and ConocoPhillips (COP) was up 7.79%.
The U.S. Oil Fund (USO) was higher by 5.40%.
Airline stocks were down on the news on expectations of higher jet fuel prices with American Airlines (AAL) off 2.31% and Delta Air Lines (DAL) down 1.27%.
Stocks of oil refiners are modestly lower with Marathon Petroleum (MPC) off 0.13% and Valero (VLO) down 1.15% on uncertainty about what higher crude prices mean for refining margins.
One final inflation note: The timing of this supply reduction couldn’t be much worse for gasoline prices with oil companies looking to build supplies ahead of the summer driving season.
Oil stocks were modestly lower today, Tuesday. April 4, with Pioneer Natural Resources, for example, off 1.22%.
