Oil companies win from OPEC+ production cut announcement

Las public oil companies They were the winners with the surprise announcement by OPEC+ to cut the production of barrels of oil, which caused the rebound of more than 6.0% in international energy prices this Monday.

This translated into a profit of 80,932.52 million dollars in the joint market capitalization of a sample of only six oil companies listed on the Stock Exchange that had the best performances of the day.

Regarding its performance, the shares of the Texan firm ConocoPhillips they shot up 9.28% on the New York Stock Exchange. The second highest performing was ExxonMobilwith a gain of 5.90 percent.

The decision of the OPEC+ He also promoted the negotiation of the French TotalEnergiestranslating into a benefit of 5.89% in the price of its shares listed on the Euronext Stock Exchange in Paris.

Other stations with a good reaction in their exchange in the stock market for the news were those of BP PLC (+4.29%); Chevron (+4.16%) and those of Shell (+4.12%).

On Sunday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced a cut of 1.16 million barrels per day to their production, equivalent to 1% of their world production, starting in May. The report caused surprise among market participants because they expected it to remain unchanged.

The foregoing caused Brent oil prices to rise this Monday to 84.93 dollars per barrel, equivalent to an increase of 6.3%, and crude West Texas Intermediate (WTI) rose 6.28%, to close at 80.42 dollars per barrel.

“The announcement by the members of OPEC+ to automatically cut production caused a higher price of crude oil that went above 80 dollars and, consequently, the shares of companies related to the oil sector had a positive day”, said Alejandro Fuentes, Director of Short-Term Capital Strategy at Actinver Casa de Bolsa.

The specialist added that this rise in international oil prices worries the market due to the risk of inflation shooting up again.

For her part, Gabriela Siller, director of Economic Analysis at Banco Base anticipated that “the capital market could face downward pressures, due to the possibility of a rebound in inflation due to higher oil prices, which could also force the main central banks globally, to continue raising the interest rate”.

Improved outlook for oil companies

Alejandro Fuentes emphasized that the increase in the price of the shares of oil companies reduces the losses that some have accumulated in the year on the Stock Market, since in the first three months of the year they had been penalized and closed with the worst performance. While Trading in technology stocks weakened on Monday.

He commented that high oil prices improve the prospects of public companies in the sector. From a technical point of view, if the energy price breaks the ceiling of 81.50 dollars per barrel, it will extend the upward movement that “surely” will also boost the oil companies in their price on the stock market.

Given that the cuts to the production of the members of the OPEC+ will continue until the end of 2023, crude oil prices will be more expensive and that means more income and profits for producers like ExxonMobil, Chevron y Occidental.

To raise oil prices, the OPEC and allies announces reduction in supply. Such as the announced cut of 1.16 million barrels per day, adding to the cut of 2 million barrels per day in October 2022.

judith.santiago@eleconomista.mx

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