Benzinga - by Piero Cingari, Benzinga Staff Writer.
Saudi Arabia and Russia announced Tuesday an extension of crude oil production cuts until December, sending shockwaves through the energy market.
The move, which came on a longer time frame than initially anticipated by market participants, is set to have a profound impact on oil prices and related stocks.
Saudi Arabia will continue its voluntary 1 million barrels per day (bpd) crude oil production cut through the end of this year. This decision, announced via the official Saudi Press Agency, comes after Riyadh first enacted the 1 million bpd reduction in July and subsequently extended it on a monthly basis.
With this extension, Saudi Arabia’s targeted crude oil production for the rest of the year will remain at 9 million bpd, subject to monthly reviews.
Simultaneously, Russia declared an extension of its 300,000 bpd oil export cuts through December. This addition further contributes to the 1.66-million-bpd reduction in voluntary crude output that some OPEC members have committed to until the end of 2024.
Oil Prices Skyrocket, Stocks Rally
WTI-graded crude oil prices soared to $87 a barrel, reaching their highest level since mid-November 2022. This surge in prices solidified crude oil’s momentum, with a remarkable 30% increase registered since the end of June 2023, firmly establishing a bull market phase.
Adding to the bullish sentiment, the highly monitored 50-day and 200-day moving averages for crude prices recently converged, forming a golden cross, a technical signal often associated with further upward potential.
WTI Oil Price Daily Chart: Crude Posts Golden Cross, 8 Consecutive Positive Sessions
Notably, U.S. oil stocks and oil-related exchange-traded funds are capitalizing on the surging crude prices.
The Energy Select Sector SPDR Fund (NYSE:XLE) experienced a 1% rise on Tuesday, outperforming all other sectors in the S&P 500. Additionally, the SPDR S&P Oil & Gas Exploration and Production (NYSE:XOP) showed a 0.5% increase, while the VanEck Oil Services ETF (NYSE:OIH) surged by 2.2%.
The best-performing U.S. large-cap oil stocks Tuesday include Occidental Petroleum Corp. (NYSE:OXY), which rose by 2.2%; and EOG Resources, Inc. (NYSE:EOG) and Exxon Mobil Corp. (NYSE:XOM), both of which experienced a 1.9% increase.
U.S Oil Stocks With The Largest Upside Potential
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